Indonesia becomes a net crude importer Source :OsterDowJones Commodity Wire Date: 18/05/2004
-------------------------------------------------------------------------------- Legal uncertainties over new oil and gas laws made Indonesia a net importer of crude for the first time in March, undermining the country's membership in the Organization of Petroleum Exporting Countries. Indonesia, Asia's only member of OPEC, imported an average 484,000 barrels of crude oil per day in March, and exported 448,000 b/d, a government official told Dow Jones Newswires Monday. Imports rose further to 503,000 b/d in April, while exports dropped to 413,000 b/d, the official said on condition of anonymity. Indonesia releases the value of monthly oil and gas trade, but doesn't separately detail figures for crude. The country has often been a net importer of refined oil products, but this is the first time it has brought in more crude from abroad than it has exported. Although new projects due online later this year might boost output, the latest figures are a worrying sign. Last November, oil minister Purnomo Yusgiantoro said output would increase from just over 1.0 million b/d then by some 150,000 b/d in 2004. "It's a clear warning that there's something wrong with the management of the country's oil and gas resources," said Kurtubi, the director of the Center for Petroleum and Energy Economics Studies, a local independent oil and gas industry think-tank. Indonesia's crude oil output was around 980,000 b/d in April, according to a recent survey by Dow Jones Newswires, down from over 1.3 million b/d three years ago. This has been primarily a result of sluggish investment and a lack of exploration for new fields. Declining crude oil output will further diminish Indonesia's already minor role within OPEC, and could threaten its membership in the future if the country remains a net importer of crude, analysts say. Can't Meet OPEC Quota The nation already can't meet its daily OPEC output quota of 1.2 million b/d, making it one of the few members that don't overproduce. Saudi Arabia, the world's largest producer, has an official daily output some eight times that of Indonesia, and hugely larger proven reserves. Problems in the sector also highlight Indonesia's failure to take advantage of its abundant natural resources since the fall of former authoritarian President Suharto in 1998. With crude oil prices now at 13-year highs above $41, the cash-strapped government is missing out on a bonanza, analysts said. Large foreign oil and gas companies say Indonesia's new democracy has failed to set down clear guidelines for investing in the sector since Suharto's ouster. The government promulgated a new oil and gas law in 2001, but failure to introduce supporting legislation has caused widespread confusion. Provincial governments, which are demanding a larger say over how to use their resources under new decentralization rules, further add to the chaos, foreign oil executives say. "How are we going to play if there's no rules of the game," said an executive with an international oil and gas company in Jakarta. Even where foreign oil companies want to move ahead, squabbling between the government and PT Pertamina (PTM.YY), the state-owned oil and gas company, has delayed projects. Under the new oil and gas law, the government stripped Pertamina of regulatory role, but the state-owned company still wields a large and ill-defined power, say people working in the sector. Exxon Mobil's (XOM) plans to develop the country's largest oil discovery since the 1960s have been on hold for four years due to Pertamina's demand for a higher stake in the project. The field, situated in Central Java, has likely maximum reserves of 1 billion barrels, an important find for a country with only 10 billion of total proven and probable reserves. But development of the field can't move ahead until Exxon Mobil and Pertamina reach an agreement. Attractive Terms For Producers Still, the government is optimistic it can boost output. New production is expected to come online later this year from 14 fields, including those operated by Unocal Indonesia, Total Indonesie, PetroChina (PTR) and ConocoPhillips Indonesia. In a bid to attract investors, the government decided last year to offer up to 25% of revenues from oil fields to its joint-venture partners, up from a normal 15% split. As a result, the number of new contracts to explore for oil and gas rose to 15 in 2003 from one in 2002, but remained much lower than a record 29 contracts in 1997. Major international companies were still largely absent from the bidding for these new blocks, and the winners were mostly local companies with relatively less experience and funding. Indonesia could have up to 50 billion barrels in reserves under its land and oceans, according to government studies. Attracting foreign capital to help unlock these reserves will be key to ensuring the country doesn't become dependent on crude imports over the lo ng term, analysts said. --------------------------------------------------------------------- To unsubscribe, e-mail: [EMAIL PROTECTED] Visit IAGI Website: http://iagi.or.id IAGI-net Archive 1: http://www.mail-archive.com/iagi-net%40iagi.or.id/ IAGI-net Archive 2: http://groups.yahoo.com/group/iagi Komisi Sedimentologi (FOSI) : F. Hasan Sidi([EMAIL PROTECTED])-http://fosi.iagi.or.id Komisi SDM/Pendidikan : Edy Sunardi([EMAIL PROTECTED]) Komisi Karst : Hanang Samodra([EMAIL PROTECTED]) Komisi Sertifikasi : M. 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