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.