Govt eyes higher oil revenue

The Jakarta Post, Jakarta

Soaring crude oil prices mean the government expects higher revenue from oil and gas operations this year despite a drop-off in production.

The Oil and Gas Upstream Regulatory Body (BP Migas) estimates oil and gas revenue may reach close to US$12 million for 2004 compared to $10.5 million last year.

"The high crude oil prices compensates for the decline in oil output. Prices of liquefied natural gas (LNG) that are linked to oil prices also get a boost from recent surge in oil prices," Rachmat Sudibyo said on Friday.

Out of the projected $12 million in revenue, some $7 million is expected to come from oil and $4 million from natural gas. Last year, oil contributed $6.5 million to state coffers and gas brought in $4 million.

Rachmat said recent discoveries and the exploitation of new oil and gas fields would help achieve the revenue target despite the country's declining oil output, which has dropped steadily during the past five years.

Indonesia's oil output now stands at an average of 1.17 million barrels per day (bpd), lower than 1.288 million bpd and 1.389 million bpd in 2002 and 2001, respectively.

The decline in output has been attributed to aging oil fields and the lack of new investment in the oil and gas sector.

Indonesia's natural gas reserves, meanwhile, have been on the rise. Proven natural gas reserves now stand at 90.3 trillion cubic feet (TCF) and potential reserves are estimated to be at 86.29 TCF.

Rachmat said unfavorable fiscal policies and uncertainty in the regions had hampered oil and gas exploration activities.

BP Migas planning deputy Zainal Achmad said companies had purportedly made two new oil and gas discoveries this year -- in the Jabung block in South Sumatra operated by Petrochina and in the Pangkah block in northeast Java operated by Amerada Hess.

"But we haven't received official reports from the companies to confirm these findings," Zainal said.