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110601
Tue, 03/09/2010 - 07:51
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https://oananews.org//node/110601
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News Focus: GOVT ADVISED TO LOWER PLANNED OIL PRODUCTION TARGET
By Andi Abdussalam
Jakarta, March 8 (ANTARA) - Planning to propose an oil production target of 965,000 barrels per day in 2010 to the House of Representatives, the government has been advised by an oil observer to revise the figure downward to make it more realistic.
"The target is too ambitious and baseless," oil observer Pri Agung Rakhmanto said on Monday. Rakhmanto who is also director of ReforMiner Institute said the government had better change the figure into a more realistic one which, in his view, was 950,000 barrels per day.
The government was planning to submit a 2010 revised state budget with an oil production of 965,000 barrels per day. However, Rakhmanto said the government might have set the target merely for reasons of "prestige."
"Maybe, the government has set the target only based on political considerations, namely to create a higher economic growth figure or a bigger deficit so that it can borrow more money," he said.
He said on the one hand, the government was pushing ahead for higher oil production while, on the other, it was issuing many regulations which were discouraging investment in the oil and gas sector.
According to Rakhmanto, Law No. 22 / 2001 on Oil and Gas should be revised so that oil production could be raised.
Yet, the government was sure that the 965,000 bpd production target could be achieved. The country has the potentials to pump more oil than the target. The low production in the last two months was caused by a number of technical disturbances in a number of oil fields.
The Upstream Oil Regulating Board (BP Migas) has recorded that average oil production in the January-February 28, 2010 period stood at 951,214 barrels per day.
This, according to Rakhmanto, was far below the target at 956,000 barrels per day as is to be set in the state budget. In February alone, production was 959,186 barrels per day while on February 28, production reached 961,964 barrels per day, including 148,762 barrels per day of condensate.
However, PB Migas head R Priyono said if there was no disturbance, production could reach 974,000 barrels per day.
A number of production disturbances were recorded with that of Kodeco which dropped 4,000 barrels per day, Cepu oil field only produced 13,700 of its target of 20,000 barrels per day and JOB Pertamina-Petrochina East Java declined to 3,000 barrels per day.
The government is sure that once the disturbance is overcome production as set in the state budget would be achieved. After all, it is planning to raise its oil production in the next five years.
National Development Planning Minister Armida Salsiah Alisjahbana said the government was planning to raise the target of oil lifting to 1.01 million barrels per day in 2014.
"We will increase the oil lifting to 1.01 million barrels per day," she said at the parliament building last month.
The target is the one conveyed by the minister of energy and mineral resources and actually it has been lowered from 1.2 million barrels a day as previously set. "That is the target of the minister of energy and mineral resources and it has been lowered from 1.2 million barrels a day," she said.
The minister admitted that so far the realization of oil lifting has often dropped below the target thus causing budgeting problems as the oil lifting target is connected with government revenues put in the national budget.
In the 2010 state budget the target of oil lifting is set at only 965,000 barrels a day or up only by 15,000 barrels from 2008 which was set at 950,000 barrels.
State-owned oil and gas company Pertamina has the interest in the fulfillment of the oil production target, especially for meeting its profit-making target.
The government in this case is optimistic that Pertamina will be able to meet its profit-making target of Rp25 trillion this year in view of current oil price developments.
"The target is not a willful one but was calculated carefully. The figures are still rational," State Enterprises Minister Mustafa Abubakar said after installing seven new Pertamina directors recently.
He said the target was set while the world`s crude price had dropped. So with the development of current price now close to US$80 per barrel he said he believed the target would not be difficult to achieve.
"We will fight so that `the rule of the game` in the ministries of finance and energy and mineral resources will be supportive for Pertamina to carry out its functions comfortably," he said.
Finance Minister Sri Mulyani Indrawati said meanwhile the assumed oil price for 2010 in the revised state budget would be reduced to US$77 per barrel. "We will reduce the assumed oil price a little from initially between US$75 and US$80 per barrel to US$77 per barrel now," she said.
She said the change was made in view of developments and in consideration of current economic conditions particularly the prospects of economic recovery.
"When we first set the price it was close to US$80 per barrel. As the government`s policy was aimed at maintaining the price stability we then decided to make the US$80 price the initial benchmark price. It was indeed overshot then, and so US$77 is considered more correct, not too high to overshoot but is also quite high to capture price changes," she said.
Jakarta, March 8 (ANTARA) - Planning to propose an oil production target of 965,000 barrels per day in 2010 to the House of Representatives, the government has been advised by an oil observer to revise the figure downward to make it more realistic.
"The target is too ambitious and baseless," oil observer Pri Agung Rakhmanto said on Monday. Rakhmanto who is also director of ReforMiner Institute said the government had better change the figure into a more realistic one which, in his view, was 950,000 barrels per day.
The government was planning to submit a 2010 revised state budget with an oil production of 965,000 barrels per day. However, Rakhmanto said the government might have set the target merely for reasons of "prestige."
"Maybe, the government has set the target only based on political considerations, namely to create a higher economic growth figure or a bigger deficit so that it can borrow more money," he said.
He said on the one hand, the government was pushing ahead for higher oil production while, on the other, it was issuing many regulations which were discouraging investment in the oil and gas sector.
According to Rakhmanto, Law No. 22 / 2001 on Oil and Gas should be revised so that oil production could be raised.
Yet, the government was sure that the 965,000 bpd production target could be achieved. The country has the potentials to pump more oil than the target. The low production in the last two months was caused by a number of technical disturbances in a number of oil fields.
The Upstream Oil Regulating Board (BP Migas) has recorded that average oil production in the January-February 28, 2010 period stood at 951,214 barrels per day.
This, according to Rakhmanto, was far below the target at 956,000 barrels per day as is to be set in the state budget. In February alone, production was 959,186 barrels per day while on February 28, production reached 961,964 barrels per day, including 148,762 barrels per day of condensate.
However, PB Migas head R Priyono said if there was no disturbance, production could reach 974,000 barrels per day.
A number of production disturbances were recorded with that of Kodeco which dropped 4,000 barrels per day, Cepu oil field only produced 13,700 of its target of 20,000 barrels per day and JOB Pertamina-Petrochina East Java declined to 3,000 barrels per day.
The government is sure that once the disturbance is overcome production as set in the state budget would be achieved. After all, it is planning to raise its oil production in the next five years.
National Development Planning Minister Armida Salsiah Alisjahbana said the government was planning to raise the target of oil lifting to 1.01 million barrels per day in 2014.
"We will increase the oil lifting to 1.01 million barrels per day," she said at the parliament building last month.
The target is the one conveyed by the minister of energy and mineral resources and actually it has been lowered from 1.2 million barrels a day as previously set. "That is the target of the minister of energy and mineral resources and it has been lowered from 1.2 million barrels a day," she said.
The minister admitted that so far the realization of oil lifting has often dropped below the target thus causing budgeting problems as the oil lifting target is connected with government revenues put in the national budget.
In the 2010 state budget the target of oil lifting is set at only 965,000 barrels a day or up only by 15,000 barrels from 2008 which was set at 950,000 barrels.
State-owned oil and gas company Pertamina has the interest in the fulfillment of the oil production target, especially for meeting its profit-making target.
The government in this case is optimistic that Pertamina will be able to meet its profit-making target of Rp25 trillion this year in view of current oil price developments.
"The target is not a willful one but was calculated carefully. The figures are still rational," State Enterprises Minister Mustafa Abubakar said after installing seven new Pertamina directors recently.
He said the target was set while the world`s crude price had dropped. So with the development of current price now close to US$80 per barrel he said he believed the target would not be difficult to achieve.
"We will fight so that `the rule of the game` in the ministries of finance and energy and mineral resources will be supportive for Pertamina to carry out its functions comfortably," he said.
Finance Minister Sri Mulyani Indrawati said meanwhile the assumed oil price for 2010 in the revised state budget would be reduced to US$77 per barrel. "We will reduce the assumed oil price a little from initially between US$75 and US$80 per barrel to US$77 per barrel now," she said.
She said the change was made in view of developments and in consideration of current economic conditions particularly the prospects of economic recovery.
"When we first set the price it was close to US$80 per barrel. As the government`s policy was aimed at maintaining the price stability we then decided to make the US$80 price the initial benchmark price. It was indeed overshot then, and so US$77 is considered more correct, not too high to overshoot but is also quite high to capture price changes," she said.
