Pertamina's capability to operate CPP queried

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)