Delay becoming net oil importer: President

JAKARTA (JP): President Soeharto stated here yesterday that Indonesia, which is facing increasing energy demands, will do its best to postpone becoming a net oil importer.

"On account of the possibilities of exploiting the oil, gas as well as geothermal reserves at our disposal, we shall try our best to postpone for as long as possible the time when our country will become a net importer of oil," Soeharto said at the opening ceremony of the 25th annual convention of the Indonesian Petroleum Association (IPA).

The association groups companies related to the oil industry in Indonesia.

Soeharto pointed out that efforts are being continued to discover new oil, gas and geothermal deposits, to make the most efficient use of them, and to diversify the use of energy.

"We are also trying to create a better investment climate to encourage investors to do business in Indonesia," he noted.

Furthermore, he said, the state-owned oil and gas company Pertamina can also expand the basis of its oil and gas resources -- if necessary, beyond Indonesia -- with a view to raising and securing the oil supply, and increasing foreign exchange revenues.

"Well aware that such a venture requires huge capital, we shall continue to offer opportunities to both foreign and local partners to work together with Pertamina in the oil and gas industry in Indonesia," said the President.

Currently, Indonesia's production of crude oil and condensate stands at around 1.6 million barrels per day and exports at 760,000 barrels of crude oil per day.

Analysts have predicted that since domestic demand for oil is increasing faster than supply, Indonesia will become a net oil importer within 10 years if no new significant reserves are discovered.

At the opening ceremony, which was also attended by Minister of Mines and Energy I.B. Sudjana and Pertamina's president Faisal Abda'oe, President Soeharto also underlined the importance of securing the market and capturing new markets.

"On the other hand, efforts must also be made to lower production costs by enhancing efficiency, effectiveness and productivity, to make the end products competitive in the international market," he said.

He said that in the future there will be an increasing number of oil-producing nations on the world market.

"If we're not prudent in anticipating this trend, our market niche will shrink. If this happens, not only will the state's income decline but it will also weaken our ability to speed up the pace of development," he noted.

The state budget depends on oil and natural gas taxes for around 30 percent of its total revenues.

He said that Pertamina and its partners have made encouraging progress. However, further restructuring and improvement, both internally and externally, are still needed to make the state company self-reliant and competitive with international oil and natural gas companies.

"In addition, a more suitable pricing mechanism should be created based on economic considerations for the domestic industry that strikes a better balance between the interest of consumers and producers."

He asked all sectors related to the oil industry in Indonesia to cooperate in sustaining the smooth operation of the oil, gas and geothermal industries carried out by Pertamina and its partners.

At the three-day annual convention, there was also an display of industrial equipment by 34 local and foreign energy companies.

About 2,000 participants of the convention will also discuss 89 technical papers on the energy business and the environment. (13)