Oil revenues projected to exceed target
Oil revenues projected to exceed target
JAKARTA (JP): Amidst concern about a possible drop in crude oil prices, the government expects that its revenues from the oil sector will exceed its target of Rp 9.8 trillion (US$4.3 billion) for the current fiscal year, ending in March.
The president of state-owned oil firm Pertamina, Faisal Abda'oe, told journalists after meeting with President Soeharto here yesterday that Indonesian crude oil prices would likely reach an average of US$19 a barrel until the end of the current fiscal year, far above the government's budget price of $16.50.
Indonesia currently enjoys relatively high oil prices due to the winter in oil importing countries and the breakdown of two power plants in Japan, the main importer of Indonesia's crude, Abda'oe said.
Indonesia's oil prices are formulated on the basis of the average of world oil prices during the last 52 weeks and the current average market prices divided by two.
"We hope that our oil prices will average out at $19 a barrel," Abda'oe told journalists. "We just hope that Iraqi oil doesn't enter the market too soon, so our plans won't be thrown off course."
World oil prices were slightly lower earlier this week after Iraq accepted an invitation from the United Nations to resume discussions on a UN oil-for-food plan.
According to Reuters, international benchmark North Sea Brent blend futures closed at $16.97 a barrel in London on Monday, down 13 cents from Friday's close, still well short of OPEC's $21 target.
A new round of talks between Iraq and the UN again raises the prospect of Baghdad selling some 700,000 barrels per day (bpd) of crude oil on international markets.
At its year-end conference in Vienna last November, the Organization of Petroleum Exporting Countries (OPEC) agreed to allow Iraq to produce up to 400,000 bpd of crude to reach a combined output of 24.52 million bpd for the first half of this year.
Abda'oe predicted that OPEC would take action if Iraqi oil entered the market and caused world prices to fall.
"Certainly if Iraq enters the market, OPEC will take steps. What kind of steps? I cannot say now. It is up to the OPEC ministers to decide," Abda'oe said.
He noted that the reentrance of Iraq into the world oil market would automatically affect prices, and the supply structure.
"How prices will be affected if Iraq enters the market is very difficult to predict, but it is clear the price will be affected, and we have to be ready to face it," Abda'oe said.
He met with President Soeharto at his Jl. Cendana residence to present Rp 4 billion in donations to the Gotong Royong Kemanusiaan Foundation, chaired by Mrs. Tien Soeharto. (rid)