Government delays decision on CPP oil block

The government has delayed the appointment of Riau as the operator of the Coastal Plain Pekanbaru (CPP) oil block in the province until the end of this year as the provincial administration and state owned companies are still divided over their ownership in the oil block, Neraca reported on Saturday.

Director general of oil and gas at the Ministry of Mines and Energy Djoko Darmono said in Friday that the appointment could not be carried this month as originally scheduled because both Pertamina and Riau were still fighting for a larger ownership in the oil block.

He said that negotiations between Pertamina and Riau administration were still continuing and he hoped both sides would soon be able to solve their difference.

Earlier reports said that Riau province had reached an initial agreement to cooperate with Pertamina, Caltex in operating the CPP oil block beginning in August next year.

The government initially gave three options to Riau to operate the CPP oil block, which is currently operated by Caltex. The provincial administration under the three options was offered to manage the oil field in joint venture with Pertamina, or with Caltex or with both of two oil giants. But the province rejected the offer and demanded to select its own partners.

The Riau, however, later abandoned its own option and returned to a negotiation table to work with both Caltex and Pertamina in operating the oil block.

The Riau administration has established a new company to take over the management of the oil block after the current contract expired in August next year. The new company PT Riau Makmur Petroleum will represent the local government in the operation of the oil block. (*)