Regions fret over lower oil, gas output

A'an Suryana, The Jakarta Post, Jakarta

The country's oil and gas producing regions are now worried that output this year will continue to decline due to lack of investment by oil and gas companies.

"Lack of investment has been our main concern," said Yan Suryana, the executive director of the Oil and Gas-producing Regions Consultation Forum.

He feared that the government's 2003 oil output target of 1.27 million barrels of oil per day (bpd) could not be met.

Last year, the government set a target of 1.32 million bpd, but actual output was only 1.2 million bpd.

The government gas output target this year is 6.8 billion metric standard cubic feet per day, compared to actual output of 6.1 billion metric standard cubic feet per day last year.

Yan said that it was high time now for regional governments to launch measures to attract new investment in the oil and gas sector.

He did not explain why investment had been slowing down, but experts have said that there were a number of factors, including security problems in certain areas like the troubled Aceh province, conflicts with local people, and local government policies that discouraged investors.

The increasing lack of investor interest in the country's oil and gas sector, which had been the primary source of revenue for the country's ailing economy, can be seen from the fact that only one new oil and gas contract was signed by the government last year out of the 14 oil and gas blocks being offered.

The only block that was signed was the Muara Bakau oil and gas block in the Makassar Strait.

If this situation continues, the future of the country's oil and gas industry would be at stake, and this would eventually affect government revenue.

But Yan said that despite the current lower oil and gas output, revenue for both the central government and local governments would likely be unaffected because of the relatively high oil prices on the international market.

The current state budget assumes an average oil price of US$22 per barrel. Prior to the Iraq war, however, the price jumped to around $40 per barrel, although it has now declined to around $25 per barrel.