RI records $1b oil trade deficit in Q1

RI records $1b oil trade deficit in Q1

Urip Hudiono, The Jakarta Post, Jakarta

Despite strong gas exports helping to keep Indonesia's overall
oil and gas trade account in the black, the country is still on a
trend of becoming a net oil importer, already booking more than
US$1 billion oil trade deficit during this year's first quarter.

Responding to inquiries on the subject from the House of
Representatives' Commission XI for financial affairs, Minister of
Finance Jusuf Anwar said in a written statement on Monday that
Indonesia's oil and gas trade account had as of March actually
recorded a surplus of US$642.2 million.

In terms of oil trade alone, however, Indonesia is still
experiencing a $1.37 billion deficit, due to the country's high
oil import needs and declining oil production at home.

Oil trade includes the exports and imports of crude oil, as
well as refined oil products.

As comparison, data from the ministry shows that Indonesia's
oil trade deficit stood at $3.73 billion last year, although the
country in overall managed to enjoy a surplus of $3.96 billion in
its oil and gas trade, due to a high $7.69 billion surplus in gas
trade.

The cause of the deficit mainly lies in Indonesia's high
import needs of refined oil products, as the country has actually
been able to maintain a meager export advantage in its crude oil
trade.

A member of the Organization of Petroleum Exporting Countries
(OPEC), Indonesia allocates most of its high-grade crude oil
production for exports, whose proceeds are used to finance the
main bulk of its state budget.

The country then imports cheaper crude oil, mostly from the
Middle East, to be processed at its local oil refineries, for
domestic consumption.

Due to increasing consumption of fuel and oil products, plus a
lack of locally refined oil producers, Indonesia has apparently
imported more than it can produce.

The government has earmarked an oil production of 1.125
million barrels per day for this year's state budget, up from
1.075 million barrels per day last year.

With such a production level, the government is expecting a
gross oil revenue of some Rp 103.55 trillion (about $10.9
billion) this year, at a crude oil price of $35 per barrel and a
rupiah exchange rate of Rp 8,900 per U.S. dollar.

Data from the Ministry of Energy and Mineral Resources shows
that the country's oil production reached an average of 1.070
million barrels per day during this year's first three months.

Meanwhile, Jusuf also explained that the government's revenue
from domestic fuel sales is expected to increase by some Rp 20.34
trillion this year. The figure comes from the Rp 99.62 trillion
the government will receive due to the recent domestic fuel price
hike, as compared to Rp 79.28 trillion it should have received
under the previous fuel prices.

The government hiked fuel prices by an average of 29 percent
in March to help decrease the country's bloating fuel subsidies
from Rp 60.1 trillion to only Rp 39.8 trillion.