Medco gets financial backing to operate CPP

Medco Holding has received a financial backing from Credit Suisse First Hong Kong to operate the Coastal Plain Pekanbaru (CPP) oil block in cooperation with the provincial administration of Riau, Bisnis Indonesia reported on Friday.

The company's spokesman Muntazar Nurrahmadi said in Jakarta on Thursday that the foreign bank had given its full support to Medco in operating the oil block, which produces about 7,000 barrel of crude oil per day.

"If the financing from Suisse is not adequate enough we are ready to find other financial institutions," he said.

Earlier reports said that the Riau government would likely cooperate with local businessmen such as Arifin Panigoro, the chairman of the Medco Group, Aburizal Bakrie, the chairman of the Bakrie Group and Iman Taufik, in operating the CPP oil block.

President Abdurrahman Wahid has formally given his support to the province to operate the oil block once the current contract now held by PT Caltex Pacific Indonesia (CPI) expires in August, next year.

The President's statement has provoked controversies not only because it is against the government's earlier decision, which assigned state oil company Pertamina and Caltex to operate the oil block, but also due to the fact that it contradicts with the existing law.

According to the existing law, the country's oil and gas resources should be operated under a production-sharing contract with Pertamina. (*)