Thu, 11 Aug 1994

Oil prices to remain stable for rest of year

JAKARTA (JP): Oil prices will likely remain stable until the end of this year due to increasing world demand, Minister of Mines and Energy I.B. Sudjana said.

He told reporters during a gathering with students here yesterday that the severe summer in the northern hemisphere, the economic recovery in industrial countries and the reopening of a number of oil refineries in North Sea countries have raised the demand for oil.

Secretary General of the Organization of Petroleum Exporting Countries (OPEC) Subroto, who is here on a home visit, said at a dinner meeting with oil executives Monday evening that the world's oil demand will likely increase by 800,000 barrels per day (bpd) this year.

The dinner, organized by the Indonesian Institute for Energy Economics (IIEE), was attended by Minister Sudjana, a former state minister for environment and population, Emil Salim, and former Indonesian ambassador to the United States Abdul Rachman Ramly.

Subroto did not specify any figures for the world demand but said that world oil production is now estimated at 67 million bpd, of which over 24.9 million bpd are produced by OPEC's 12 members and the remainder by other countries.

He said oil prices, therefore, will most likely remain high until the end of this year.

On Monday, the average price of OPEC oil increased to US$18.20 per barrel from $16.50 in June, Brent to $18.19 from $17.09 and the West Texas Intermediate (WTI) to $20.15 from $19.07.

The price for Indonesia's benchmark oil, Minas, rose to a range of between $20.55 and $20.95 early this month from $16.70 in June.


Subroto said the discipline of OPEC members in limiting their production to their agreed-upon ceilings has also contributed to the price increases.

OPEC has set its total output ceiling at 24.5 million bpd this quarter.

Subroto said he was even optimistic that oil prices on the world market will remain stable until the year 2000 before increasing afterwards, even though the role of oil in the energy mix will gradually decline from 40 percent at present to some 30 percent in 2050.

He said the industrialization process in developing countries will likely increase the portion of their oil utilization from 34 percent at present to 65 percent in 2020, while the portion in industrial nations will gradually decrease from 66 percent to 35 percent.

"Based on my long-term outlook, developing countries, therefore, will face serious problems of oil supply," he warned.

He said Southeast Asian countries, for example, will be able to provide only 40 percent of their oil demand by early 2000, while the remaining 60 percent will have to be imported. (fhp)