Pertamina to own majority stake in CPP oil block: Govt

JAKARTA (JP): The government said state oil and gas company Pertamina will own the majority stake in a joint company that will operate the Coastal Plains Pekanbaru (CPP) oil block in Riau.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government would decide Pertamina's exact share in January next year.

"I think in January we can decide for sure how much Pertamina will own," Purnomo said on Friday during a break in a meeting in Merak, Banten, on how to stop fuel smugglers.

Pertamina and the local government in Riau will form a joint venture to operate the CPP oil block after Caltex Pacific Indonesia's contract rights to the oil block expire in August next year.

Purnomo emphasized that Pertamina's stake would be more than 51 percent, thus ruling out Riau's demand for a controlling part of the joint venture.

Riau's local government has insisted it be given a 70 percent stake, claiming it was fully prepared to operate the oil block.

However, Purnomo said the government considered Riau's demand to contravene the regional autonomy law, under which the oil and gas sector remains under the central government's control through Pertamina.

The decision, Purnomo said, was taken by a coordinating team of ministers comprising Minister of Home Affairs and Regional Autonomy Surjadi Sudirja; Coordinating Minister for Political, Social and Security Affairs Susilo Bambang Yudhoyono; Coordinating Minister for the Economy Rizal Ramli; and Purnomo.

The ministerial team last week took over talks to determine CPP's future ownership, after long negotiations between Pertamina, Riau and Caltex failed to bear results.

Pertamina president Baihaki Hakim further said bowing to Riau's demand might set a precedent for other natural resource- rich regions to put forward similar claims.

"The problem here does not only affect Riau, but is related to problems in other regions as well, like Aceh and Irian Jaya," he said.

He added that the government had yet to inform Riau of its decision to grant Pertamina the majority stake in the oil block.

As for Caltex, he said the company might be included in the joint venture, once Pertamina and Riau have reached an agreement.

"But this is not mandatory. I have heard that other parties are also interested," he added.

Baihaki, who is a former president of Caltex, was referring to the China National Offshore Oil Company.

Caltex initially wanted to extend its contract to the CPP oil block. The company and Pertamina had almost reached an agreement over their respective stakes in CPP when Riau's wish to operate the oil block was unexpectedly granted by President Abdurrahman Wahid.

According to Purnomo, Caltex will pull out of the negotiations should the opportunity to obtain a feasible stake in the joint venture diminish.(bkm)