Domestic oil output, price to decline next year: Purnomo

JAKARTA (JP): Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Friday that the lower oil and gas revenue in the 2002 state budget draft resulted from a decrease in oil production and a lower international oil price average.

"We are taking conservative measures for next year," Purnomo said after President Megawati Soekarnoputri unveiled the state budget draft at a plenary session of the House of Representatives.

The oil and gas revenue in the upcoming state budget is set at Rp 66.1 trillion (US$7.4 billion), compared to the Rp 100.95 trillion target in the current budget.

The 2002 budget draft assumes an average international oil price of $22 per barrel compared to $24 under the current budget.

Oil production in the next budget is targeted at 1.23 million barrels of oil per day (bpd), compared to 1.34 million bpd in the current budget.

Meanwhile, the exchange rate of the rupiah is assumed at Rp 8,500 to the U.S. dollar, from Rp 9,600 to the dollar under the current budget.

Purnomo explained that oil production would decrease next year because many oil companies would continue to reduce their oil output due to ongoing security problems in several parts of the country.

"Many oil companies can't operate at their normal output level, and we can't force them to raise production," he said.

He cited as an example PT Caltex Pacific Indonesia (CPI), the largest oil and gas company in the country, which would likely continue to lower production from its normal production level of about 700,000 bpd.

CPI oil production has reportedly decreased by about 40,000 bpd to 660,000 bpd as production has been disrupted due to theft and other security problems.

However, Purnomo said, oil production would rebound in the next two years after some oil fields, such as the Cepu block operated by ExxonMobil Oil Indonesia, and Belanak block in West Natuna, operated by Conoco Indonesia, would commence production.

In the state budget draft, the government also said it planned to reduce fuel subsidies to Rp 32.3 trillion from Rp 53.8 trillion in a bid to help ease the burden of the budget.

As a result, the government may have to raise fuel prices starting in January next year, possibly by an average of 30 percent.

The plan to raise fuel prices, however, must first receive House approval.

Irwan Prayitno, the legislator of the Justice Party who heads House Commission VIII for environmental, science and technology affairs, said that lower oil and gas revenue in the state budget draft "was logical".

"The House realizes that the country's oil production will continue to decline mainly because of CPI output drop," he said.

There is also a prediction that global oil demand will weaken next year, causing a drop in the international oil price, he added.(iwa)