2003 oil price assumption revised

The Jakarta Post, Jakarta

The House of Representatives budget committee agreed on Tuesday with the government to revise upward the oil price assumption in the 2003 draft state budget.

The assumption is now set at US$22 per barrel, compared to $20.5 per barrel stated in the initial state budget draft.

Antara quoted House budget committee chairman Abdullah Zainie as saying that the change had been made after taking into consideration the current trend of rising oil prices.

Oil prices have been on the up over the past month amid a looming U.S.-led attack on Iraq.

U.S. benchmark crude oil futures jumped to their highest level since February 2001 to US$31.22 a barrel at one point on Tuesday, while North Sea Brent oil climbed to $29.53, its highest level since Sept. 11 last year.

The government proposed the draft 2003 state budget last month, and is currently debating it with the House budget committee.

During Tuesday's meeting, it was also agreed to increase the oil output target for next year to 1.27 million barrels per day from 1.26 million barrel per day under the original draft.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that higher oil production would only be possible if security conditions in oil production centers around the country were maintained.

"Oil production declined some time ago because of security and social disturbances," he said.

Meanwhile, Minister of Finance Boediono said that the revision in the oil price assumption would consequently lead to changes in the overall state budget.

He said that the government and the House had yet to complete discussion of the necessary changes.

The original state budget draft assumed a deficit of 26.3 trillion, or around 1.3 percent of gross domestic product (GDP).