Indonesia’s President Susilo Bambang Yudhoyono said the country’s fuel subsidy bill could reach more than 140 trillion rupiah ($14.2 billion) in 2005.
The government has assumed an oil price of $40 per barrel in its 2006 budget, compared with $45 per barrel in 2005.
“This price may indeed be deemed to be incompatible with the current price that tends to be very high,” Yudhoyono said.
He estimated Indonesia’s crude oil and condensate output will be 1.075 million barrels per day (bpd) in 2006, about the same as in 2005. “Should the world oil price remain high as it is today, the fuel subsidy for 2005 is estimated to reach more than 140 trillion rupiah,” he said.
That would compare with the current budgeted figure of 76.5 trillion rupiah.
He said a contract extension with ExxonMobil on Cepu oil block in Java has been concluded.
Meanwhile, Indonesian state oil company PT Pertamina said it plans to raise at least $500 million through bonds next year to finance crude oil imports and strengthen its working capital.
The bonds were expected to be issued early next year, Pertamina finance director Alfred Rohimone told the Bisnis Indonesia newspaper.
“The minimum amount of the bonds is $500 million, but we have not picked any underwriters,” he was quoted as saying.
Pertamina is in charge of the import and distribution of oil products in the country.
Its dollar buying activities to finance imports, which could reach $1 billion a month, have been blamed as a cause of a weakening rupiah currency.
Despite its membership in the Organisation of Petroleum Exporting Countries (Opec), production problems and ageing oil wells have made Indonesia a net crude oil importer.
In an effort to cut the use of oil for power generation, Indonesian state electricity firm PT Perusahaan Listrik Negara (PLN) has signed a natural gas supply deal with PetroChina.
The Chinese company will supply between five million and seven million cubic feet per day of gas to a 20 megawatt PLN power plant in East Java for about six years starting in 2006.
PetroChina will supply the gas from the Tuban block on East Java.
