Pertamina's capability to operate CPP queried

JAKARTA (JP): Oil company Medco Energy's president supported yesterday the government decision not to extend Caltex Pacific Indonesia's contract for the Coastal Plains Pakanbaru oil field after its 2001 expiry.

But Medco's president, Arifin Panigoro, did question the capability of the state-owned oil and gas company Pertamina to operate the oil field.

"From a nationalist point of view, why don't we operate it (the CPP oil field) by ourselves? But we must also be realistic. Will the takeover bring more benefits?," he asked.

"This is not the first time (for Pertamina) to take over (an oil field) from foreign contractors. Please, check out how the oil fields have performed after they were taken over by Pertamina," Arifin told reporters after a meeting with President Soeharto.

Arifin was reporting to the President concerning Medco's activities.

Pertamina announced early this week that the government had approved Pertamina's takeover of the CPP oil field from Caltex when its contract expired in 2001.

Pertamina's president, Faisal Abda'oe, said Caltex had requested an extension on the CPP contract. Pertamina rejected the request, saying Caltex had refused to meet the condition of granting a 10 percent share to Pertamina.

Abda'oe reiterated yesterday that Pertamina had the capability to operate the field, including technology and funding.

Caltex's president, Baiyaki Hakim, said Caltex had asked the government to reconsider its decision because the exploitation of the CPP oil field needed the enhanced oil recovery (EOR) technology, which Pertamina has not mastered.

He said the government would lose US$2.1 billion in potential additional income if Pertamina took over the operation.

"Pertamina does not have a good record of operating the oil fields it has taken over," Hakim said, pointing as an example, to the Lirik oil field -- also in central Sumatra -- which Pertamina took over from the U.S. oil company Stanvac in 1983.

He said the production of the Lirik oil field kept decreasing after Pertamina began operating it.

"We feel undermined by the statement (Hakim's)," Abda'oe said yesterday, adding that Pertamina had dozens of engineers who were well trained by the U.S. oil companies Chevron Corp. and Texaco Inc, which co-own Caltex, in the EOR technology.

He also claimed Pertamina had applied EOR technology in its oil fields in Jambi, Prabumulih and Tanjung.

Arifin noted that the EOR technology was relatively complicated, which even Medco has not yet successfully applied in its own fields.

He said Caltex developed the technology for 15 years.

"And the results are unbelievable. (With EOR technology) Caltex has managed to add 300,000 barrels per day (bpd) to its Siak oil field. It is great and the world's most successful result of EOR technology," he said.

Caltex currently exploits four blocks in Riau: CPP, Rokan, Mount Front Kuantan (MFK) and Siak fields. The contracts of Rokan and Siak had been extended to 2020 and 2013, while the MFK contract will expire in 2005.

The CPP field produces 77,000 bpd, or less than 10 percent of Caltex's total gross output of 770,100 bpd. (jsk)