Oil price to remain high next year: OPEC official

Oil price to remain high next year: OPEC official

Leony Aurora, The Jakarta Post, Jakarta

The Indonesian Crude Price (ICP) is expected to range between
US$47 and $53 a barrel next year as tight capacity in refineries
worldwide keep global oil prices high, an official of the
Organization of Petroleum Exporting Countries (OPEC) says.

A lack of new refineries would keep the market edgy, which in
turn would give more leeway to speculators, Indonesia's OPEC
governor Maizar Rahman said on Monday during a hearing with the
House of Representatives' energy and mines commission.

However, global oil prices would decline steadily over the
next two or three years to around $50 to $60 per barrel, said
Maizar.

"Prices in 2006 will be some $5 per barrel lower than in
2005," he said.

"The ICP will be between $47 and $53 a barrel."

The government said in mid-August that it would use an oil
price assumption of $40 per barrel in next year's budget. The ICP
is an index that reflects the prices of various types of crude
oil produced here. The ICP stood at $59.26 a barrel on Monday
afternoon.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro
said at the time that international prices would decline by up to
$15 a barrel as the global economy slowed down and fear of
political unrest in oil-producing countries abated.

On Monday, the price of Brent North Sea crude for October
delivery fell by $1.43 to $64.63 per barrel in London. The market
for trading in New York's main contract, light sweet crude for
delivery in October, was closed on Monday.

President Susilo Bambang Yudhoyono said last Wednesday that he
personally thought that $55 was more realistic as the oil price
assumption for the 2006 budget.

Despite being an oil producer, Indonesia finds itself unable to reap
windfall profits from the current sky-high oil prices as output
has steadily declined over the past five years while domestic
oil-based fuel consumption has been rising.

Oil and Gas Upstream Regulatory Agency (BP Migas) chairman
Kardaya Warnika said that crude and condensate production would
stand at 1.11 million barrels per day (bpd) on average next year,
5 percent higher than the expected full year figures for 2005.

In August, oil production stood at 1.077 million bpd as
compared to 1.049 million bpd the previous month due to higher
output here from state oil and gas firm PT Pertamina and U.S.
firm Unocal, said Kardaya.

Production in December would reach 1.089 million bpd as more
oil would be pumped from PetroChina's Sukowati field and Santos'
Oyong field in Madura, he added.

"Output will remain this high until March 2006, when the wet
season will make it difficult to jack up production," said
Kardaya. At the end of next year, the coming on stream of a
number of new fields are expected to raise production to 1.115
million bpd.

In light of the soaring oil prices, the government is
considering hiking the prices of subsidized oil-based fuels --
premium gasoline, diesel, and kerosene -- after October.

Purnomo said that three schemes were being discussed to bring
prices up to market levels. The first option was to continue
applying the current system, which involves setting prices and
increasing them periodically so as to reduce subsidy spending.

The second was to determine a target date for bringing the
prices of subsidized, oil-based fuel prices up to market levels ,
while the third option was to directly apply market prices.

Traditionally, raising gas and kerosene prices is a political
hot potato in Indonesia. When the government increased prices by
29 percent on average in March, the move was greeted by a storm
of protest.