Riau may choose own partner for CPP oil block

JAKARTA (JP): The Riau provincial administration may choose its own partner to develop and manage the Coastal Plain Pekanbaru (CPP) oil block, Governor Saleh Djasid said here on Friday.

Saleh said Riau would prefer to operate the CPP oil block with partners other than Caltex Pasific Indonesia or Pertamina, as proposed by the board of commissioners of the state oil and gas company.

"Now we have expanded the options for solving the CPP problem to four," Saleh told journalists after a meeting here with Minister of Mines and Energy Susilo Bambang Yudhoyono.

Pertamina's board of commissioners initially offered the Riau province three options in operating the CPP oil block. The first option was to establish a joint venture between three parties, the second to form a joint venture between Riau and Pertamina and the third option was to establish a joint venture between Riau and Caltex.

All three options were rejected during the meeting on Friday by Riau, which instead proposed the fourth option of choosing its own joint venture partner.

The meeting also was attended by executives of Pertamina and Caltex, which currently operates the CPP oil block.

"The minister will first have to inform President Abdurrahman Wahid on Saturday of the new option," Saleh said.

The government instructed Pertamina and Caltex in 1998 to form a joint venture to operate the oil block once Caltex's contract expired in 2001.

President Abdurrahman Wahid, however, stepped in and bowed to demands from Riau for control of the block. The President announced the change after Pertamina and Caltex had agreed to a 55 percent and 45 percent stake in their joint venture, respectively.

Saleh said it had not yet been decided how much the provincial administration's stake in the block would be, but he guaranteed Riau would be in full compliance with all existing laws governing the management and operation of oil blocks.

The head of Riau's legislative council, Chaidir, who was also present at the meeting, said the province was not interested in joining with either Pertamina or Caltex in operating the CPP oil block.

"It will be 100 percent us, but we'll see who becomes our partner later," he said, adding that the province would prefer to work with local oil companies.

He said he had not yet heard any proposals from local oil companies to form a joint venture with the province to operate the oil block.

According to media reports, several local oil companies have expressed interest in working with Riau, including the country's largest local oil company, PT Medco Energy.

Chaidir dismissed doubts of the province's financial capability to develop the block, saying numerous creditors were already lined up to join the project.

Caltex, a joint venture of American-based oil companies Chevron Corp. and Texaco Inc., currently produces about 70,000 barrels of crude oil per day (bpd) from the CPP block.

It operates four oil producing blocks in Riau: CPP, Rokan, Kuantan and Siak, making it the country's largest oil producer with a total output of 740,000 bpd, or 80 percent of Indonesia's total oil production. (bkm)