Oil price to remain strong: Kuntoro

Oil price to remain strong: Kuntoro

JAKARTA (JP): Minister of Mines and Energy Kuntoro
Mangkusubroto said on Monday he was optimistic international oil
prices would remain strong at an average of US$16.40 per barrel
through to the end of the year, with members of the Organization
of Petroleum Exporting Countries (OPEC) adhering to their
production ceiling quotas.

"We hope the price level will prevail through to the end of
the year," Kuntoro said after a meeting with President B.J.
Habibie at the state palace.

He ascribed the recent improvement of oil prices to the
adherence of OPEC's members to the ceiling on output agreed upon
by the organization in Vienna in March.

"The level of adherence by OPEC members to the output quotas
now reach 88 percent," He said.

OPEC members decided to reduce their output by 1.7 million
barrels per day (bpd) from April 1, and non-OPEC producers said
they would reduce their output by about 400,000 bpd.

Kuntoro said OPEC's output currently stood at 22.97 million
bpd or 35 percent of the global oil output of between 74 million
and 75 million bpd.

Kuntoro said that at present the world's oil demand exceeded
the supply, adding he was optimistic the situation would persist
for many months to come.

He said that aside from the cut in output by OPEC members, the
world's oil supply also declined due to the closure of many oil
wells in non-OPEC oil producing countries, including the United
States, following the sharp drop in oil prices.

For instance, he said, oil companies in Texas closed down
thousands of oil wells several months ago when the price of oil
fell to below $10 per barrel, lower than their production costs.

The International Energy Agency (IEA), which was formed by
developed nations in the 1970s to monitor crude oil markets,
raised on Friday its estimate for world oil demand this year on
improved Asian prospects.

IEA also said OPEC countries were respecting their output
ceiling quotas.

"Global oil production fell by 400,000 barrels a day to 73
million barrels in May, driven by a cut in OPEC crude
production," the IEA said in its monthly oil market report.

It said OPEC compliance with the cutback agreements "reached
90 percent (in May), up from a revised 82 percent in April".

The IEA data suggest that some OPEC members are more diligent
at cutting production than others. Saudi Arabia, Venezuela,
Kuwait and the United Arab Emirates have fulfilled 90 percent or
more of their pledged cutbacks.

Qatar and Indonesia have kept pumping almost as if the
agreement did not exist, the report said.

Kuntoro earlier said Indonesia adhered to its output quota of
1,187 bpd.

Indonesia expects Rp 12.4 trillion in oil revenue in the
1999/2000 fiscal year, based on the oil price projection of
$10.50 per barrel.(prb/jsk)