Govt to discuss oil price revision
Friday, September 22 2000 - 03:30 AM WIB
The Indonesian government planned to discuss with the House of Representatives (DPR) the possibility to revise the prevailing reference oil price in the 2000 State Budget in view of the high price of oil.
"The revision must be carried out very carefully, because the price of oil may decline next year. Previously, the government proposed 20 US dollars for each barrel. Therefore, this will be discussed with the House Commission IX," the Director General of Oil and Gas at the Energy and Mineral Resources Ministry Rachmat Sudibyo told the press at an Indonesian International Oil, Gas & Energy Conference in Jakarta on Wednesday.
Rachmat said it was not easy to predict the price of oil on the international market, but as a guidance, every increase in the price of crude oil by one US dollar per barrel contributes Rp 3 trillion to the state's coffers.
"But Rp 1.7 trillion of the extra Rp 3 trillion will be used as fuel subsidy, and the Rp 1.3 trillion will constitute a windfall profit," he said.
He said that the present high price of oil caused by the increasing demand for oil stocks from the industrialized countries.
In the meantime, there has been a change in fuel specification in the United States, where the refineries were not ready, and had to resort to imports. China also changed its energy consumption pattern from coal to oil.
"But next year there is the possibility that the developed countries could meet their desired stocks, and demand will decline. And if this happens, the price of oil will also drop. Therefore we must be very careful in revising the State Budget," he said.
Oil & Gas Bill
Rachmat Sudibjo also said the government would table an oil and gas draft law to the House of Representatives next month.
"The government will maintain the upstream industry, while the downstream industry will be liberalized. But the stages of the liberalization would have to be discussed by the government with the House," he said.
He said in the draft law Pertamina would still be expected to win competition in the oil and gas business in the country.
"Pertamina has a very strong contribution, large refineries and special terminals. All these are added values enabling the state oil company to become as the main player," he said.
Newcomers in this sector would need vast amounts of money.
"I think it would not be so easy for newcomers to enter this business. As soon the liberalization takes effect, newcomers would not be able to join straight away," he said. (*)