Oil prices should average over $20 this year

The realization of the average crude oil prices for the government's year 2000 budget is expected to exceed the budget's target of US$20 a barrel following the recent rally of crude oil prices in the international market, according to an official at the Directorate General of Financial Institutions.

The director of oil and gas revenue, Sahala Lumban Gaol, said that because of the high crude oil prices, the government's fuel subsidy would also rise by Rp 1.5 trillion because the government would have to delay the 12 increase of fuel prices in the domestic market from April to October.

"I think with this high crude oil prices, we will get a gain," Sahala told Bisnis on the sidelines of a hearing with the House of Representatives' Commission IX on finance and banking.

The government's 2000 budget, which starts at April 1 and ends at Dec. 31, 2000, assumes that oil prices will average $20 a barrel, higher than the initial target of $18 a barrel.

On Monday, crude oil prices in the international market breached the $30 level per barrel, because of the OPEC producing cartel's decision not to pump an additional supply to the tight market.

With that assumption of average crude oil price of $20 a barrel, the government expects that income from oil and gas sector will reach $25.3 trillion, while fuel subsidy will hit Rp 22.4 trillion. As the government postpones the implementation of fuel price increase from April to October, the subsidy will expand to Rp 23.9 trillion. (*)