House? Budget Committee sets 2017 ICP prices at $40-55 per barrel

The House of Representatives? State Budget Committee decided on Wednesday to set the Indonesia Crude Price (ICP) assumptions at US$40-$55 per barrel for the 2017 State Budget, slightly different from the price assumption that has been agreed upon by the Ministry of Energy and Mineral Resources and the House?s Commission VII which oversees energy affairs.

The price assumption agreed upon by the ministry and the Commission VII is $45-$55 per barrel, higher than the ministry?s initial proposal of $35-$45 per barrel, the Directorate General of Oil and Gas said in a statement.

In the current system, the state budget assumptions are first discussed by ministries together with the House?s commissions. The results are then submitted to the State Budget Committee which is tasked to review the assumptions before the final version of state budget is submitted to the House?s plenary session for approval.

The House?s State Budget Commission also set oil lifting target at 750,000-790,000 barrels per day (bpd), compared to 740,000-760,000 bpd proposed by the ministry and 760,000-800,000 bpd agreed upon by the ministry and the Commission VII. Meanwhile, gas lifting target is set at 1,100-1,200 thousand barrels of oil equivalent per day (boepd), higher than the government?s proposal of 1,050-1,150 thousand boepd and the target of 1,150-1,500 thousand boepd agreed upon by the ministry and the Commission VII.

During the hearing with the State Budget Committee, Director General of Oil and Gas IGN Wiratmaja predicted the oil price will move within a wide spread in 2017, from $40-$45 to $59-$60.

Meanwhile, SKK Migas? Vice Chairman Zikrullah explained that during the hearing with the Commission VII, SKK Migas was asked to make a simulation for an oil production of up to 800,000 bpd. SKK Migas told the Commission that 800,000 bpd is impossible to reach next year due to postponement of projects occurring in 2016. ?There are many well drilling programs that have been put on hold, while some exploration well programs have also been delayed,? he said.

SKK Migas? data say there isn?t any program planned for 2017 that will be able to significantly increase production. ?Thus, the (oil lifting) target of 800,000 bpd is difficult to achieve,? he said.

Differently, Zikrullah said, the gas lifting target of 1,100-1,200 thousand boepd is achievable particularly due to the Muara Bakau PSC gas project operated by Italian firm Eni, which is scheduled to come onstream in the second quarter of 2017.

Editing by Johannes Simbolon