Indonesia says $22-$25 oil price range reasonable
Indonesia says $22-$25 oil price range reasonable
Jerry Norton, Reuters, Jakarta
Indonesia's Mines and Energy Minister said on Friday that
OPEC's US$22-$25 oil price range target for 2002 was reasonable
even though current price strength did not necessarily reflect
supply and demand fundamentals.
Purnomo Yusgiantoro also said Indonesia still hoped it would
average $22 per barrel for its crude oil in 2002 despite an
average of $19 in the first two months of the year.
He was speaking to a group of foreign reporters just before
leaving this weekend on a trip with President Megawati
Soekarnoputri to China, the two Koreas and India, with expanding
Indonesia's energy business in those countries a key topic.
While it was "good news that oil prices are at a good level"
that was "not because of fundamentals...but more on what happened
in the Middle East" and the psychological impact of such
geopolitical developments, Purnomo said.
The United States has been seeking to build support in the
region for possible tougher actions against Iraq, part of what
President George W. Bush calls the "Axis of Evil", and Israeli-
Palestinian tension is at a high.
But current events are "not the end of the story," Purnomo
said. "The game is not over. We are finalizing first quarter and
we still have the second, third and fourth quarter. Hopefully, we
will have improvements in oil prices in the future."
OPEC's crude oil basket price slipped to $22.98 a barrel on
Wednesday from Tuesday's $23.22, but other benchmarks have been
between $25 and $26 this week.
"I think if you say the range of $22-$25 a barrel that will be
the reasonable price level for overall this year," Purnomo said.
Indonesia's own $22 target price is part of the country's
budget and many key projections about the economy and revenue are
based on it.
Purnomo said Indonesia would have an extra 300,000 barrels per
day (bpd) of oil production capacity by the end of this year or
early next year, against the current 1.3 million.
"We will have additional oil production from Unocal of West
Seno oil field in Makassar Strait, from Exxon Mobil in Central
Java, from Conoco in Natuna as well as Pertamina in South
Sumatra," he said.
While his ministry is doing its best to deal with recognized
problems related to overlapping regulations, security and the
layers of bureaucracy created by regional autonomy, Indonesia
continues to keep and attract energy investment because it still
has vast untapped production potential, Purnomo said.
He added that while it was the nature of business to always
want more in the way of concessions, Indonesia was "open for any
discussion of what kind of incentives (energy and mining
investors and companies) may need."
Indonesia will be seeking to do some energy business of its
own when Megawati -- accompanied by Purnomo among other ministers
-- visits China, the two Koreas and India over a two-week period
starting this Sunday.
In China, Purnomo said he hoped for discussions on the Tangguh
project. Tangguh in Indonesia's Papua province is on a shortlist
of three for a liquefied natural gas (LNG) supply deal for
China's first LNG terminal in its southern province of Guangdong.
And for its part Indonesia -- which is trying to build up its
flagging electricity generating sector -- is interested in
China's "very competitive" medium-scale power plants, he said.
LNG will also figure prominently in South Korea, the world's
second-largest LNG importer after Japan.