Government, House set lower cost recovery budget for 2017

By Firmansyah Sembiring

The government and the House of Representatives Commission VII on energy and mining reached an agreement on Thursday to set the oil and gas cost recovery budget for next year at US$10.4 billion, lower than the $11.77 billion earlier proposed by upstream oil and gas authority SKK Migas.

The lower 2017 cost recovery budget comes as the House earlier demanded for higher oil lifting target next year of 815,000 bpd, compared to the initial proposal of 780,000 bpd.

Interim Minister of Energy and Mineral Resources Luhut Panjaitan, speaking to reporters following a meeting with the Commission VII discussing the economic assumptions to be used in the 2017 State Budget, said that the lower cost recovery budget can be achieved through various cost-cutting and efficiency measures.

Meanwhile, SKK Migas Chairman Amien Sunaryadi said that it would be quite difficult to increase oil lifting while the cost recovery budget is reduced. ?The reduction in the cost recovery budget will affect oil and gas lifting,? he said.

Editing by Reiner Simanjuntak