Fri, 08 Dec 2000

Riau to get maximum 20% stake in CPP: Pertamina

JAKARTA (JP): The government has allocated the province of Riau a 20 percent stake in the joint venture that will run the Coastal Plain Pekanbaru (CPP) oil block in Riau, according to a senior official at state oil and gas company Pertamina on Thursday.

"It has already been decided -- a maximum of 20 percent -- what's left is to negotiate that amount (with Riau)," Pertamina's exploration and production director Gatot K. Wiroyudo told reporters in a press meeting.

He said that the allocation of 20 percent was not concrete, as it depended on negotiations with Riau.

The province earlier demanded a 70 percent stake in the planned joint venture but the demand was rejected by the government.

Riau has been vying with Pertamina for control of the CPP oil block after the contract held by PT Caltex Pacific Indonesia expires in August next year.

Caltex initially requested an extension of its contract but pulled out from the talks after it learned that it would become a minority shareholder.

Gatot explained that to make the investment economically viable, Pertamina should own at least 90 percent in CPP's new joint venture.

According to the existing oil and gas law, the government receives 85 percent of the revenue generated by the CPP oil block and the remaining 15 percent goes to the operator.

Gatot said that the 15 percent of CPP's oil production would yield roughly 6,000 barrels of oil per day.

Deputy governor of Riau, Rustam S. Abrus, in responding to the government's decision to allow the province only a 20 percent stake, called the allocation unfair.

"Even a 70 percent stake would be unfair to us," he told reporters.

He said he was unaware of the government's recent decisions, and would wait for an explanation.

"Until they explain it to us, we cannot take clear steps," he said.

Rustam maintained that the province was fully prepared to take over the operation of the CPP oil block.

But he refused to name the investor who was backing Riau's efforts to control the oil block.

According to him, the investor is a company with experience in the oil business.

"We'll reveal the company, if the government gives us the stake (we want)," he added.

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) at the CPP block.

The company operates a total of four oil blocks in Riau, making it the country's largest oil producer with a total output of about 710,000 bpd, or more than 40 percent of Indonesia's total oil production. (bkm)