"Windfall profit" from oil and gas sales may reach Rp 6 trillion

The higher than expected oil prices in the international market may bring in a windfall profit of at least Rp 6 trillion to the government?s coffers. The windfall could be even higher if the oil and gas revenues also include the receipts from the sales from liquefied natural gas (LNG) which is expected to reach about 27 million tons this year, Kompas daily reported on Friday.

Quoting oil and gas analyst Kartubi, the daily said that with the crude oil prices averaging at about US$25 per barrel and with the total crude production of about 480 million barrels a year (1.3 million barrels per day), the receipts from oil and gas would exceed the initial target by US$1.3 billion.

"Because the windfall should be equally shared by production sharing contractors, the amount that would go to the government?s coffer would reach about US$650 million, with the assumption of the rupiah exchange rate of Rp 9000 per dollar," Kartubi said.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta earlier that the government expected to receive a windfall profit of about Rp 5.76 trillion or about eight percent above the target made in the 2002 stage budget.

The government projected to receive about Rp 72 trillion in the 2002 stage budget. The target is based on the assumption that the price of crude oil will reach an average of US$22 per barrel, the total oil production would reach 1.32 million barrels per day, and the average exchange rate of the rupiah of Rp 9,000 per U.S. dollar.

Purnomo said although the daily oil production was about 90,000 barrels lower than the target due to a decline in the production of the Coastal Plain Pekanbaru (CPP) oil field in Riau, the overall oil and gas receipts exceeded the target thanks to the better than expected oil prices which averaged at about US$24 per barrel during the year.

Kartubi called on the government to be transparent about the windfall profit to the people. "The Legislative Council (DPR) should ask the government to explain the windfall from oil and gas revenues transparently so that the people will get informed where and how the money will be used," he added. (*)