Govt not to increase crude oil price assumption in budget

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that it would be difficult for the government to increase crude oil price assumption from the current US$22 per barrel in the 2001 state budget to $25 per barrel as demanded by some legislators because international crude oil prices tended to decrease.

Purnomo acknowledged that international oil demands in the international market would increase by 1 million barrels next year, but he noted that there would be about 2 million barrels of "missing oil" or crude oil supplies from countries outside the OPEC cartel.

The minister noted that if the House of Representatives insisted that crude oil price assumption must be raised to $25 per barrel, there must be a hedging strategy to protect the budget in case oil prices in the international market fell below $25 a barrel.

He said that the government would continue to convince the House over the danger of increasing crude oil assumption, as it would indirectly affect the government's development budget. Nevertheless, he said he would let the House to decide. (*)