Govt may retain Chevron: Official

Pekanbaru, Riau, (ANTARARIAU News) - The government will possibly allow PT Chevron Pacific Indonesia to continue managing the Siak Block in Riau province after the company's contract on the area expires in 2013, an energy ministry official said.

"Chevron will possibly be retained because we cannot just let it go after it has made such great contributions from its Siak Block operations," Budi Handoko, head of the Oil and Gas Upstream Regulatory Agency (BP Migas)'s public and institutional relations division, said here on Tuesday.

The US-based oil company, previously known as Caltex, signed its production sharing contract on the Siak Block with the government in 1991. Valid for 22 years, the contract is due to expire in 2013. Before 1999, it had been developing the Siak block under a work contract inked in September 1963. .

Budi said Chevron had in 2011 submitted a proposal to the energy and mineral resources ministry to extend its contract on the Siak Block while a number of national and regional oil companies had also evinced an interest in the block.

"Any way, the final decision (on who will eventually further operate the Siak Block) is for the Energy and Mineral Resources Minister to make. The block has yet to undergo an auctioning process," he said.

The government was in principle also committed to giving national and local oil companies the widest possible chance to manage the Siak Block and would prefer the block to be operated under a collaborative arrangement, he said,

However, he added, the government would also be careful not to repeat the mistake that was made with regard to the West Madura Offshore Block. The Madura Block which was initially operated by China National Offshore Company (CNOOC) and Kodeco Energy was eventually taken over by Pertamina but in 2011 the block's output dropped drastically.

"We don't want a repeat of the Madura Block mistake in Riau," Budi said,

The Siak Block's production now stood at 2,000 BPOD (barrels of oil per day) or about 300,000 liters per day.