Government plans energy buffer reserves this year

The government plans to set up energy buffer reserves this year as part of the country?s energy security program, said Minister of Energy and Mineral Resources Sudirman Said on Thursday.

He said that the 2016 state budget will finance the reserves program. The government has allocated Rp 1.6 trillion for so-called energy security fund in the state budget, about half of which, or Rp 800 billion will be allocated for the reserves program specifically for the purchase of crude oil, Sudirman said following a meeting with the National Energy Council.

He added that the Council has been assigned to draft presidential regulation as legal umbrella for the planned energy buffer reserves.

Meanwhile, Director General of Oil and Gas at the ministry, IGN Wiratmaja Puja said that assuming a crude price of US$50 per barrel, the initial budget allocation of Rp 800 billion will allow the purchase of 1.6 million barrels of crude oil 1.6 million barrels, or sufficient for one and one-and-a-half supply of fuel products in Indonesia.

He said that the crude oil will be put in domestic storage tanks, operated by oil and gas production sharing contractors with combined storage capacity of 4.5 million barrels.

Puja said that the ministry is finalizing ministerial regulation to implement the reserves program. He added that the ministry is also finalizing ministerial regulation in relation to fuel operational reserves, currently stands at 22-27 days of supply. The government is planning to increase the operational reserves to 30-day supply, he said.

Editing by Reiner Simanjuntak