Riau to get maximum 20% stake in CPP: Pertamina

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)