Indonesia pressed to develop energy policy
Eric Watkins
Senior Correspondent
LOS ANGELES, July 24 -- Indonesia has been urged to take advantage of current high oil and gas prices and develop a new policy aimed at encouraging domestic firms to boost production of the country's own reserves.
"The high oil prices should motivate Indonesia to revise its policy on oil and gas with a view to empowering Indonesian private firms to take part in oil exploration and production," said Effendi Siradjuddin, chairman of the Association of Indonesian Oil & Gas Companies (Aspermigas).
In particular, Effendi said Indonesia could increase its oil production if the government created a new policy involving more local companies to carry out exploration of new fields or to operate so-called brown oil fields left behind by foreign oil companies.
"We should have the aim that by 2020 Indonesian firms become majority shareholders, or own at least 70% of the country's oil fields instead of the current 15%," he said.
Effendi estimated there are at least 60 brown oil fields that could still be exploited by local firms, and that additional production of some 300 b/d could come from those fields, if they were managed well.
High oil prices are hitting the Indonesian economy hard. Although Indonesia is a member of the Organization of Petroleum Exporting Countries, it still has to import part of its fuel needs due to declining domestic oil and gas production.
As the Indonesian government subsidizes domestic fuel prices, the increasing price of oil and gas on the international market has become a major contributing factor in the country's spiraling budget deficit.
According to sources, Indonesia's oil production reached 1.14 million b/d in 2003 but dropped to 1.09 million b/d in 2004, and to 1.062 million b/d in 2005. In 2006, production is forecast to drop to less than 1 million b/d.
Contact Eric Watkins at [email protected].