RI wants majority share in joint venture with Caltex

JAKARTA (JP): The government wants state oil and gas company Pertamina to have a majority share in a joint venture with PT Caltex Pacific Indonesia to develop the Coastal Plains Pekanbaru (CPP) oil block in Riau, a top official said on Tuesday.

Secretary-general at the Ministry of Mines and Energy, Djoko Darmono, said it was in the nation's interest that Pertamina control the majority share in the new joint venture.

"This is in line with a House of Representatives recommendation for us," Djoko told reporters at his office.

Djoko made the statement in view of the disagreement between Pertamina and Caltex over a share composition in the joint venture to develop the CPP oil block.

Based on the House recommendation, the government decided in 1998 to transfer the development of the block to a joint venture of both companies after Caltex's production sharing contract (PCS) on the block expires in August 2001. The government called on both companies to negotiate the share ownership.

The block currently produces about 70,000 barrels per day, while Caltex produces a total of 750,000 barrels per day in four oil blocks in Riau.

During negotiations, Pertamina proposed to hold a 65 percent stake in the joint venture against 35 percent for Caltex.

However, Caltex, the country's biggest oil producer, demanded a 50 percent stake.

Djoko said the government was firm with the decision to give Pertamina majority shares in the joint venture.

"A majority could also mean 51 percent for Pertamina against 49 percent for Caltex," Djoko said, adding the government wanted Pertamina to have larger shares in the company.

Djoko said the government had set the end of February as the deadline for both companies to complete negotiations, adding he was optimistic that both companies would complete the negotiations soon.

Separately, Pertamina director of exploration and production Priyambodo Mulyosudirjo said Pertamina's offer of 65 percent against 35 percent was not a final bid.

He said Pertamina sought a win-win solution in its negotiations with Caltex and would not force Caltex to accept Pertamina's offer.

"We comply with the government's demand for a majority stake for us, and we translate it into a 65 percent to 35 percent share composition," Priyambodo said on the sidelines of the 27th Indonesian Petroleum Association (IPA) convention at the Jakarta Convention Hall.

He said Pertamina hoped to complete the negotiations soon but with Caltex insisting on a 50 percent ownership, Pertamina expected the government to interfere to avoid a deadlock.

"The government wants us to jointly operate the CPP block with Caltex, so the government should make the final decision on how much of a majority share Pertamina should own," he said, adding that Pertamina was not in a position to give a final decision on the share composition.

The company, jointly owned by U.S. giant oil companies Chevron Corp. and Texaco Inc., is currently developing four blocks in Riau: CPP, Rokan, Mount Front Kuantan and Siak. (03)