Riau can receive Rp 8 trillion from oil and gas production

Riau province?s local revenue from its share in oil and gas production might reach between Rp 8 trillion and Rp 10 trillion this year if the price of crude oil continue to increase amid worries over the possible outbreak of war in Iraq, Riau Post reported on Saturday.

Local leader H. Tabrani Rab said that the projected revenue was based on the assumption that the crude prices would reach between US$37.2 and US$41 per barrel this year and the province?s annual oil production of 221,356 barrels.

?If there is a war in Iraq, the price might further increase to US$60 per barrel,? he said.

Indonesia produces its oil production under a production sharing contract (PSC) with foreign and local oil companies. Under the PSC scheme, the government receives 85 percent of the net production (after the deduction of exploration costs), the contract receives another 15 percent. The producing province receives 15 percent from the central government?s share.

In 2001 and 2002, the Riau province received Rp 100 billion. According to Tabrani, Riau?s shares had been too small. ?We should have received Rp 1.3 trillion a year, if the calculation was fair,? he added. (*)