Imports of oil equipment decline over security

Imports of oil equipment decline over security

JAKARTA (JP): State-owned PT Surveyor Indonesia said on
Thursday security concerns were causing a significant decline in
imports of equipment for the exploration and production of oil
and gas.

"We may see a decline of between 20 percent and 25 percent
from the previous year," the company's general manager, Kusnia
Abdulrachman, said during a break in a meeting with House of
Representatives Commission V for industrial and trade affairs.

Kusnia did not have data on the estimated value of imported
oil and gas-related equipment this year, but said in 1999
realized imports of such items reached about US$2.6 billion.

The company was appointed by the government to survey lists of
planned imports of oil and gas-related products, because these
items carry no import duties.

PT Surveyor, Kusnia said, based its survey on the master lists
it received from the Ministry of Energy and Mineral Resources.

He said that according to the lists it had surveyed thus far,
oil and gas companies had reduced the amount and value of goods
they planned to import. Kusnia blamed security disturbance for
the fall in imports.

The company also said the drop in imports of oil and gas
equipment was hurting its revenue.

The state company predicted this year's net profit would
plunge to Rp 25.92 billion (US$2.7 million) from Rp 104.25
billion the previous year.

The director of production and exploration at state oil and
gas company Pertamina, Gatot K. Wiroyudo, agreed that security
problems were discouraging investment.

He estimated a decline of about 20 percent, or about $200
million, to $400 million in imports of oil and gas-related
equipment.

However, he said, another reason for the decline was that
Pertamina's production sharing partners were using more locally
made products than in previous years.

"About 40 percent of our partners' needs are supplied by local
producers," he said.

Indonesia, for example, is quite capable of supplying the
pipes for the overland transportation of gas, he said.

Local producers also are supplying cement, drilling mud and
spare parts for machines.

According to Gatot, the overall operational spending of
Pertamina's production sharing partners would remain flat this
year at about $4 billion.

Last year, oil and gas companies spent $4.3 billion in
Indonesia for exploration, production and other activities.

Pertamina estimated earlier that spending could reach as high
as $4.8 billion this year.

But according to Gatot, a realization of about $4 billion was
still notable considering the prevailing security concerns.

"Those are fresh funds they are injecting," he said.

He said oil and gas investors were mainly concerned with the
country's security situation and political and legal
uncertainties.

Given the current investment climate, he said, next year's oil
and gas spending might again remain flat at $4 billion. (bkm)