Govt upbeat oil revenue will rise

Govt upbeat oil revenue will rise

JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto projected on Friday the government's oil revenue
would rise to more than Rp 13 trillion (US$1.4 billion) for the
1999/2000 fiscal year despite a reduction in output.

Kuntoro believed oil prices would average at least $11.50 per
barrel following the Organization of Petroleum Exporting
Countries (OPEC) recent decision to cut the world's oil output by
2.1 million barrels per day (bpd).

"Despite the cut in output, Indonesia will still earn more
than Rp 13 trillion from oil and gas taxes even if oil prices
reach only $11.50 per barrel," Kuntoro said.

Under the 1999/2000 state budget, which begins on April 1, the
government's oil revenue is projected at Rp 12.443 trillion based
on an oil price assumption of $10.50 per barrel and a currency
exchange rate of Rp 7,500 to the dollar.

He said the price of oil on the world market would be well
above the government's target of $10.50 per barrel, following
agreement among OPEC members to cut output.

Indonesia agreed to reduce its oil output by 93,000 bpd to
1.187 million bpd excluding condensate during OPEC's 107th
ministerial meeting on March 23 in Vienna.

OPEC and several non-OPEC oil producing countries agreed to a
concerted effort to reverse the fall in oil prices which began in
early 1998 amid the global recession.

OPEC members agreed to cut oil output by 1.7 million bpd to
22.976 million barrels, while non-OPEC members agreed to reduce
their output by 300,000 bpd.

The cut in oil production will reduce the world's oil stock by
400 million barrels to 5.5 billion barrels by the end of 1999,
equal to the oil stock at the end of 1996 and 1997.

Kuntoro said the OPEC meeting in Vienna pushed oil prices to
$11.88 per barrel on March 15, up from $10.37 per barrel on March
4.

Market sentiment firmed following Russia's announcement, a
non-OPEC oil producer, that it would cut its oil output to about
100,000 bpd

"Oil prices climbed to $13.22 per barrel on March 23 when the
OPEC meeting was being held," Kuntoro said.

According to Reuters, crude oil futures prices briefly jumped
to $16.00 per barrel in early Asian trade on Friday in
technically driven trade, supported by a surge in oil product
futures.

Analysts and legislators expect oil prices to increase
significantly following OPEC's decision, but they caution that
the expectation could be shattered if OPEC members fail to uphold
their promise to reduce production.

OPEC's former secretary-general, Subroto, predicted on
Thursday oil prices would rise to between $15 and $16 per barrel
this year and would continue to rise to between $16 and $17 per
barrel by 2000.

"Of course, the price increases can only happen if OPEC and
non-OPEC countries comply with the agreement on production cuts,"
Subroto said.

However, Subroto believes OPEC and non-OPEC members will abide
by their commitments out of a common concern over low oil prices.
(jsk)