Caltex faces threat in Indonesia

Indonesian troops were sent to protect ExxonMobil

Protesters in the Indonesian province of Riau have threatened to disrupt the operations of US oil company Caltex unless the government cancels Caltex's licence in the region.

A rally of 200 local leaders at the weekend said President Megawati Sukarnoputri has until 8 August to reverse a decision to extend a contract for the company's local subsidiary, PT Caltex Pacific Indonesia.

"They can send troops but all we need is a match," local civic leader Tabrani Rab told Agence France Presse, referring to the explosive mood of the protesters.

But the government says it will stand by its decision to extend the licence to Caltex for 12 months from 8 August.

Government rejects ultimatum

Energy minister Purnomo Yusgiantoro held a meeting on Monday with Caltex Pacific Indonesia.

The meeting was also attended by the president of state-owned oil company Pertamina, which is a partner to Caltex, and senior officials from the police, according to the Jakarta Post newspaper.

"Production will stop if no operator exists," a senior official at the Ministry of Energy and Mineral Resources told reporters after the meeting.

The dispute centres on the Coastal Plain Penkanbaru (CPP) oil block, where Pertamina has a joint venture with Caltex Pacific Indonesia.

The Riau Islands are located between Singapore and the island of Sumatra.

Robert Galbraith, the managing director of Caltex Pacific Indonesia, was in Sumatra on Tuesday but could not be reached for comment.

Revenue worth $260m

Pertamina president Baihaki Hakim said the central government would meet with the Riau provincial administration on Tuesday.

The contract with Caltex Pacific Indonesia is worth $260m in government revenue, the Pertamina president said.

The four wells currently produce 50,000 barrels of oil per day, but are capable of yielding 70,000.

Local people have long demanded a 70% stake in the CPP block once the CPI contract expires, the Jakarta Post reported.

'Making an Exxon'

If the contract is extended, the protesters want 30% of the revenues to be allocated to the Riau people and more jobs for locals.

"If the government stands firm in their rejection, we will simply make an Exxon out of Caltex," Mr Rab told AFP.

ExxonMobil has just resumed gas production in Aceh, northern Sumatra, after a five-month suspension caused by violence between separatist guerrillas and the army.

ExxonMobil staff were allegedly threatened and kidnapped.

That closure is thought to have cost Indonesia $100m per month in liquid national gas (LNG) revenues and lost export earnings.