Oil and gas earnings lower than expected, says Kuntoro
JAKARTA (JP): State revenues from oil and gas exports for the current fiscal year is unlikely to meet the budget target due to lower crude oil prices and a stronger rupiah.
Minister of Mines and Energy Kuntoro Mangkusubroto predicted on Friday that state revenues from oil and gas operations would reach Rp 40.3 trillion (US$4.6 billion) or 81.9 percent of the state budget's projection of Rp 49.7 trillion for the 1998/1999 fiscal year ending in March.
The stronger rupiah would also reduce spendings for a fuel subsidies during the fiscal year, he said.
The minister estimated the fuel subsidy would be Rp 22.9 trillion for the whole year or 83.5 percent of the state budget's initial projection of Rp 27.53 trillion.
"The main reason for the shortfall is the strengthening of the rupiah against the dollar, which has been reducing the rupiah costs of imported crude oil and oil products."
"A declining oil price is a contributing factor," he added.
The rupiah-U.S. dollar exchange rate is expected to average Rp 9,684 throughout the current fiscal year, as against the state budget's prediction of Rp 10,600 per dollar.
The rupiah has remained stable between Rp 7,500 and Rp 9,000 per dollar during the past several months after plunging down to as low as Rp 15,000 in the first weeks of the fiscal year.
The average oil price will be $11.86 per barrel throughout the fiscal year as against the state budget projection of $13, he predicted.
During the 1999/2000 fiscal year, the government expects state receipts from oil and gas to reach Rp 20.9 trillion, with oil price forecasts of $10.50 per barrel at a rupiah-U.S. dollar exchange rate of Rp 7,500.
The fuel subsidy is projected at Rp 9.9 trillion for the next fiscal year with the elimination of a fuel subsidy aimed for 2002, Kuntoro said.
Law
Kuntoro also confirmed that the government proposed a bill on oil and gas to the House of Representatives for deliberation on Thursday.
The bill aims to create an open, competitive and efficient oil and gas industry, Kuntoro said.
Monopolies in the downstream sector -- enjoyed by state oil and gas Pertamina for decades under the existing oil and gas law -- will be lifted. The state company will be turned into a limited liability company and be in direct competition with other oil and gas companies.
The bill also opens the oil refinery sector to the private sector and allows refinery owners to market their products on the domestic market.
Regulation of the oil and gas industry, formerly overseen by Pertamina, will become a government concern.
The bill also will allow oil and gas companies to choose any type of contract -- aside from production sharing contracts currently obligatory for all companies in the country -- for their oil and gas concessions. (jsk)