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)