RI ready to cut crude oil output to improve prices

JAKARTA (JP): Indonesia is prepared to cut its crude oil output at the next meeting of the Organization of Petroleum Exporting Counties (OPEC) to boost world oil prices, Minister of Mines and Energy Kuntoro Mangkusubroto said on Friday.

"Indonesia is ready to cut its oil output if the OPEC meeting requires all countries to do so in order to improve oil prices in the world market," Kuntoro said in a weekly news conference.

Kuntoro said the expected cut would not affect the government's revenues from the oil sector for 1999/2000 budget as improving oil prices would offset the possible revenue reduction from any output reduction.

He projected the government would gain higher revenue from the oil sector if crude oil prices continued to rise as a result of the output cut commitment.

During the 1992/2000 fiscal year, the government expects state revenues from oil and gas to reach Rp 20.9 trillion, with oil price forecasts of US$10.5 per barrel at a rupiah-U.S. dollar exchange rate of Rp 7,500.

Oil prices have soared by more than $3 a barrel in a month, from a $9.90 mid-February low. May Brent crude futures registered $13.37 a barrel in London on Friday.

Meanwhile, the rupiah was quoted at 8,900 against the dollar here on Friday.

Kuntoro said the government was undecided on the amount of the output cut.

"We shall give instructions to Pertamina on the amount of the output cut after the OPEC meeting."

Kuntoro emphasized that all OPEC members would have comply with the output cut to make it effective in improving oil prices.

OPEC ministers are scheduled to meet in Vienna on March 23.

OPEC sources was quoted by Dow Jones as saying that Indonesia would be required to cut its output by 7.3 percent, or 93,000 barrels per day (bpd), to 1.187 million bpd.

However, the director of exploration and production at the Ministry of Mines and Energy, Iin Arifin Takhyan, told Bloomberg on Wednesday that the country might cut its oil output by 4 percent, equivalent to 34,000 bpd.

"The feeling among all OPEC members is that we must do our part to cut production. If OPEC cuts production by 2 million bpd ... and it distributes the cut proportionately, Indonesia should cut 34,000 bpd," Arifin said.

The country cut its output to 1.28 bpd last year from 1.5 bpd in 1997 to comply with OPEC's agreement on reductions.

Some OPEC members and non-OPEC oil producers have agreed to slash oil output by 2.6 percent from the world oil supply of about 74 million bpd to reverse the slump in world crude oil prices.

The production cut will be effective April 1.

The deal was struck at two days of talks in The Hague on March 11 and March 12 of oil ministers from OPEC's three biggest members, Saudi Arabia, Iran, Venezuela, along with Algeria and non-OPEC Mexico.

Saudi Arabia's oil minister Ali al-Naimi called it "an excellent agreement" which would erase the world's excess crude oil stocks by the end of June and raise prices to between $17 and $19 a barrel.

Several leading non-OPEC oil exporters, including Norway, have promised to participate in the oil cuts.

But, except for Indonesia, Asia's oil producers, including China, Malaysia and Vietnam, with combined daily production of more than four million bpd, have refused to cut production.

In China, oil officials said the country's main producers, China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec), would not make any special effort to join in the cuts.

China produced 162.6 million tons of crude in 1998, but was a net importer to the tune of 11.7 million tons.

Vietnam, which produces 250,000 bpd, almost entirely for export, said its production was too small to make a difference.

"So if we increase or reduce by several thousand barrels, it is not significant," said Ho Si Thoang, chairman of the board of PetroVietnam, the state oil company.

A spokesman for Malaysian state oil firm Petronas said on Tuesday a cut in its 630,000 bpd production "will not have a significant impact on the market". (jsk)