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)