Oil price increase to boost new investments: Analyst
Oil price increase to boost new investments: Analyst
JAKARTA (JP): Increased oil prices on the world market,
nearing US$20 per barrel last week, will encourage new
investments in Indonesia's energy sector, an oil analyst said.
"I think oil investors will see that now is a good time for
them to expand their exploration and production activities,"
Suyitno Patmosukismo, a former director general of oil and gas,
said at the opening ceremony of the Jakarta '96 International
Geophysical Conference and Exposition yesterday.
Last week, the average oil price of the Organization of
Petroleum Exporting Countries (OPEC)'s 12 members, including
Indonesia, was recorded at almost $20 per barrel on the world
market.
Indonesia's Minas crude oil, for example, was recorded last
week at $19.33 per barrel, almost $3 above the $16.50 set by the
government for the calculation of its 1996/97 budget, noted
Suyitno.
The present director general of oil and gas, Soepraptono
Soelaiman, shared Suyitno's view, saying that there are currently
four oil investment contracts in the waiting.
"For the current fiscal year (starting in April) we have four
new production sharing contracts with foreign investors that are
ready to be signed," Soepraptono said, adding that the government
is expecting more new contracts.
"There are several oil companies that have expressed their
interest in investing in Indonesia," he said.
He attributed the conducive investment conditions to the world
price of $19.33 per barrel, which exceeds the country's average
production cost of $13 per barrel.
According to Soepraptono, oil exploration costs in deep sea
and remote areas is between $8 and $10 per barrel. This does not
include the capital cost of about $3 per barrel.
"Therefore, we can say that oil investors will turn a profi if
they can sell their oil at $17 per barrel," he said.
In the western part of the country, he added, the exploration
cost could be between $4 and $6 per barrel.
Soepraptono said that oil prices are now reaching their peak.
"They are not likely to drastically drop or increase," he noted.
"The highest probability is that prices will level off for
some time before dropping slightly and then recovering. The other
possibility is that they will slightly drop for some time before
recovering to their original level.
"I think oil prices will average above the government-set
price of $16.50 per barrel during the current fiscal year," noted
Suyitno.
He said that the upward trend could continue until next year
because during the ongoing spring and summer seasons, Europeans
and Americans will travel a lot. They will need more gasoline for
transportation and during the winter and autumn they will need
more for heating.
The International Geophysical Conference, open until May 2, is
organized by the Indonesian Association of Geophysicists, the
Society of Exploration Geophysicists, the Australian Society of
Exploration Geophysicists, and the European Association of
Geoscientists and Engineers.
The conference will present the latest developments in
geophysical technology from 107 papers, which cover a wide range
of geophysical applications in oil exploration, mining and
geosciences. (13)