Delay becoming net oil importer: President

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.
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