RI braces for high oil prices all year
RI braces for high oil prices all year
Leony Aurora, The Jakarta Post, Jakarta
The government expects crude oil prices to remain high throughout
2005 due to lower-than-expected production from non-members of
the Organization of Petroleum Exporting Countries (OPEC) and
rising demand from China and the United States.
Indonesian governor for OPEC Maizar Rahman said on Monday that
London-based North Sea Brent Crude oil prices should stay between
US$47 and $55 per barrel, citing a study of the Center of Global
Energy Studies (CGES).
The Indonesia Crude Price (ICP) usually averages between $2
and $3 below the Brent oil prices.
"Additional production from non-OPEC members may stand at
600,000 barrels per day (bpd) this year, lower that the initial
expectation of 990,000 bpd," said Maizar.
Meanwhile, on average, world oil demand is estimated to rise
by 1.89 million bpd this year to 84.02 million bpd as faster-
paced economies push for more industrial output and consumption.
China, whose economy is expected to grow by 8.4 percent this
year, will require an additional 960,000 bpd this year and North
America another 610,000 barrels.
OPEC crude production in the first quarter of the year stood
at 29.51 million bpd while non-OPEC supply in the period was
54.56 million bpd.
Maizar urged the government to be more realistic with the
current soaring oil prices. "The high prices will stay throughout
the year," he said.
The cash-strapped government, in its budget this year, has
assumed an annual average of $35 per barrel, but it has not yet
been deliberated upon or approved by the House of
Representatives.
In its initial budget, the oil price was assumed to average
$24 per barrel.
Other factors keeping oil prices high have been unseasonably
cold weather in the northern hemisphere and a lack of investment,
despite several deregulation efforts conducted by OPEC and non-
OPEC countries.
Increasing stockpiles, especially in the U.S., and higher
capacity of OPEC might drive prices slightly down.
OPEC recently increased its quota by 500,000 bpd to 28 million
bpd to ease oil prices.
With Iraq producing effectively again -- the country's output
has not been calculated into OPEC's quota since the first Gulf
War -- of 2 million bpd, OPEC's output should exceed 30 million
bpd.
However, according to a report cited by Maizar, OPEC produced
just 30.4 million bpd in April. Still, "it (higher production)
did not bring prices down. Prices are out of OPEC's hands," said
Maizar.
Indonesia produced some 1.082 million barrels of crude oil and
condensate a day in April. The country's oil output, however, has
declined steadily due to aging oil fields and a lack of
investment.
Indonesia imports some 400,000 barrels of fuel per day to meet
domestic demand.