RI may become net oil importer in 10 years: BP Migas

RI may become net oil importer in 10 years: BP Migas

Fitri Wulandari, The Jakarta Post, Jakarta

Indonesia could become a net oil importer in 10 years if there
are no new finds and the public continues its lavish consumption
of fuel oil, a senior official at a governmental agency warned.

Rachmat Sudibyo, chairman of oil and gas upstream regulatory
body (BP Migas), said last week that in order to prevent the
nation from becoming a net oil importer, exploration should be
intensified and the public should switch to natural gas from oil.

The country needs new oil discoveries of between 400 million
and 500 million barrels annually, which is the same amount of
crude oil currently produced by the nation each year, Rachmat
said.

"Every year, we need new crude oil discoveries equal to our
current production rate to extend the lifespan of our oil
reserves," Rachmat said.

Indonesia is the only Asian member of the Organization of
Petroleum Exporting Countries (OPEC).

According to data from BP Migas, as of the end of 2003,
Indonesia's proven and potential oil reserve stood at 9.75
billion barrels, which at the current rate would be enough for 20
years of production.

Indonesia now produces 1.081 million barrels per day.

Rachmat said that aside from boosting exploration for new oil
reserves, the nation should also intensify its exploitation of
aging oil fields. Such fields normally still contain oil but
require advanced technology for its exploitation.

Reducing oil fuel consumption is also vital for Indonesia to
remain a net oil exporter, Rachmat said.

He said 70 percent of the country's oil production was now
used to produce fuel products. Fuel oil consumption for
transportation, electricity, industry and household use in 2003
reached 54.7 million kiloliters.

The Energy Information Center at the Ministry of Energy and
Mineral Resources said fuel oil consumption had been in decline
since the government began to phase out the fuel subsidy.

Three years before the 1997 financial crisis, fuel oil
consumption was growing by an average of 10 percent. From 1998 to
2000, when the government began to phase out the fuel subsidy,
fuel oil consumption grew just above 7 percent.

The government still subsidizes fuel oil sold for household
use, transportation and certain industries, keeping the retail
price of the fuel oil at 75 percent of market price. For the
mining and oil industries and their supporting and processing
industries, fuel is sold at market price.

This year, the government has allocated Rp 14. 5 trillion for
fuel subsidies. Last year, it allocated Rp 13.2 trillion, but the
realized figure was Rp 26.02 trillion.

The Energy and Information Center says if fuel oil subsidies
can be further reduced to "minimum levels", the annual growth of
fuel oil consumption could be cut to 5 percent. It does not,
however, specify what this "minimum level" is.

Promoting the use of natural gas by the public is the best way
to reduce the nation's dependency on fuel oil, Rachmat said.

The government is gearing up to increase the domestic supply
of natural gas. Indonesia produces an average of three trillion
cubic feet of natural gas annually. Only 35 percent is used for
domestic needs, with the remaining 65 percent exported in the
form of liquefied natural gas (LNG) and through pipelines.
Indonesia is the world's largest LNG exporter with annual exports
of more than 30 million tons per year.

There are currently several projects to construct natural gas
transmission pipelines to connect natural gas reserves with the
market, particularly in the heavily populated Java.