Oil surplus could reach Rp 10 trillion

The Ministry of Mines and Energy has predicted that the surplus from oil and gas sector in the current budget year to reach Rp 10 trillion, following the continuously rising crude oil prices to surpass the US$32 per barrel level.

An expert staff at the ministry, Iin Arifin Tahyan, said that although the soaring crude oil prices in the international market also increased domestic fuel subsidy, the revenue from crude sales would always be higher than the subsidy level.

"Based on our calculation, with average crude oil prices of over US$30 per barrel, the surplus in the state income at the end of the 2000 budget year will reach Rp 10 trillion," he said.

Iin Arifin said the increase in fuel subsidy would surely increase, not only because of the increasing crude oil prices, but also because of increasing fuel imports due to breakdown in the Balongan refinery. Imports of fuel would reach 260,000 barrels per day this year, compared to the normal level of 170,000 barrels per day.

Iin Arifin, who is also a member of the OPEC Expert Group Indonesia, said that the oil income target in the state budget of Rp 80 trillion - with assumption of crude oil prices averaging at $20 a barrel and rupiah's exchange rate at Rp 7,000 per dollar - would be easily be achieved and surpassed.

He noted that every $1 per barrel increase in oil prices, it would bring in about Rp 1.3 trillion in revenue to the state.

"With oil prices currently averaging over $30 per barrel, and rupiah's exchange rate at Rp 8,000 per dollar, surplus from oil prices could reach Rp 10 trillion, with total revenue of Rp 90 trillion," he added.

Meanwhile, international crude oil prices continued to book gains on Thursday. The prices of West Texas International crude breached $32 per barrel level to US$32.75 per barrel, while the benchmark Brent OPEC crude touched US$32.80 per barrel.

Iin said that crude oil prices would remain high because fall and winter would soon arrive in the Northern hemisphere, when oil demands would automatically increase.

Meanwhile, the president of the Organization of Petroleum Exporting Countries (OPEC), Ali Rodriguez, was quoted by Reuters as saying that the cartel would not increase supplies to the international market despite the soaring prices.

The decision to increase supplies or not would be taken in the next OPEC ministerial meeting on Sept. 10.

Rodriguez said that OPEC had an established mechanism to increase supplies. OPEC would supply an additional 500,000 barrels per day of crude only when crude oil prices stay above $28 per barrel for 20 consecutive trading days. (*)