Oil, gas revenue seen lower following cut in price, lifting target

By Godang Sitompul

The government expects oil and gas revenue this year to be much lower than originally projected after it cuts down the oil and gas lifting, and price targets amid the current drop in global oil price.

The Ministry of Energy and Mineral Resources during a hearing the House of Representatives Commission VII on energy and mining on Thursday finally agreed to cut down the gas lifting assumption in the revised 2015 state budget to 1.221 million barrels of oil equivalent (boepd) from the original target of 1.248 million boepd.

The meeting also revised downward the ICP assumption to US$60 per barrel from $105 in the original 2015 state budget.

Earlier on Wednesday, the government and the lawmakers agreed on a lower oil lifting assumption of 825,000 bpd, compared to 900,000 bpd in the original budget.

Acting Director General of Oil and Gas I.G.N. Wiratmadja said that the lower price and production assumptions would cut down the oil and gas revenue in the revised 2015 state budget by 61.64 percent to Rp 126 trillion from Rp 327 trillion set in the original budget plant.

The lower assumptions come amid the current drop in global oil price.

Meanwhile, Head of the upstream oil and gas authority SKK Migas Amien Sunaryadi told the lawmakers that there are as much as 23.5 cargoes of this year?s LNG production that remain uncommitted, as state-owned oil and gas firm PT Pertamina, which has been assigned to sell the output, has yet to reach agreement with buyers due to price disagreement.

Amien said that the uncommitted LNG could undermine the 2015 gas lifting target as contractors would not lift the gas from the well if there are no buyers.

He explained that Pertamina has offered a price of US$10 per mmbtu, while the buyers demanded $8 per mmbtu.

The uncommitted LNG cargo emerges following the expiry of the Badak IV LNG contract in 2013, and the Korea II LNG contract in October of last year, Amien said.

Editing by Reiner Simanjuntak