Oil prices likely to average at $16 a barrel

Oil prices likely to average at $16 a barrel

JAKARTA (JP): Spurred by production declines and improved
demand, crude oil prices during this fiscal year are expected to
average at no less than US$16 a barrel, the level used by the
government to calculate its 1994-1995 budget.

"We expect that our state budget will be secured, considering
that oil prices, which have been increasing on the world market
in the last few weeks, can be expected to remain high," Minister
of Mines and Energy I.B. Sudjana told reporters here on Wednesday
after swearing in three Echelon II officials at his ministry.

Jojo Sutarjo Amil was appointed as secretary to the ministry's
Inspectorate General, Sutopo as inspector for general affairs and
Marsudi as head of the ministry's Personnel and Administration
Bureau.

Sudjana said Indonesia's crude oil prices currently averaged
at $16 a barrel, slightly lower than the $16.1 price for the
benchmark crude oil, Brent.

The government, estimating that the country's oil prices will
average at $16 per barrel, expects to obtain Rp 12.85 trillion
(US$5.97 billion) in revenues from oil and gas this fiscal year,
besides Rp 46.88 trillion from non-oil sectors and Rp 10.01
trillion from foreign aid.

Oil price declines, coupled with higher-than-expected spending
for routine activities, forced the government to suffer an
estimated budget deficit of Rp 1.8 trillion last fiscal year,
which ended in March.

Causes

Sudjana said the recovery of world oil prices from the most
recent plunge to $13 a barrel a few months ago is partly caused
by the improvement of compliance to production ceilings by
members of the Organization of Petroleum Exporting Countries
(OPEC) and the suspension of the North Sea producing countries'
plans to increase their daily output by 800,00 barrels from the
current level of 4.5 million barrels per day.

The Middle East Economic Survey reported this week that the
combined crude oil output of OPEC's 12 members, including
Indonesia, fell by 350,000 barrels per day in April to 24.64
million bpd, about 120,000 bpd higher than their output ceiling
of 24.52 million barrels daily.

"OPEC members are now strongly committed to limiting their
production in line with their own ceilings," Sudjana said.

"We hope their compliance to their quotas will go on until
December," he said.

Director General of Oil and Gas Suyitno Patmosukismo said on
Wednesday that improvement in the economies of industrial
countries and declines in their oil stocks have also increased
the world demand for oil.

The International Energy Agency said last week that oil demand
in the member countries of the Organization for Economic and
Cooperation and Development in the first quarter of this year was
estimated to reach 40.6 million bpd, its highest level for 15
years.

Suyitno said that the oil stocks held by Japan decreased from
a level sufficient for utilization up to 140 days to a level
sufficient for only 90 days.

Figures for U.S. oil stocks, published by the American
Petroleum Institute, showed a drop of 1.07 million barrels in
gasoline reserves within one week. (fhp)