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Indonesian Energy Minister Predicts Drop in World Oil Price

Posted on: Friday, 19 August 2005, 09:00 CDT

Indonesian energy minister predicts drop in world oil price

JAKARTA, Aug. 18 (Xinhua) -- Indonesian Energy and Mineral Resource Minister Purnomo Yusgiantoro predicted Thursday that the average world crude oil price will drop by 10 US dollars in 2006, citing better supply.

Purnomo said improvement in world oil supply could be expected to spur a decline in the international price in 2006.

Non-member countries of the Organization of Petroleum Exporting Countries (OPEC) could fulfill the increased demand of oil to 1.5 million barrel per day.

"Thus, there will be an excess supply of oil from OPEC production of 4.5 million barrel per day," Purnomo was quoted by the Antara news agency as saying.

In addition, 12 oil refineries in the United States that suffered from overhaul and other disturbances, would begin operation in 2006. "Additional supply will also come from new refineries that will begin operation next year," the minister said.

"While the price of Indonesian crude in 2005 reached an average of 50 dollars to 55 dollars per barrel, we predict that the price in 2006 will decline to 40 dollars to 45 dollars per barrel," he said.

With these projections in mind, the government had set the benchmark for oil price at 40 dollars per barrel in the 2006 draft state budget, he said.

The assumed crude oil price was set at 40 dollars per barrel based on thorough calculations, Purnomo said.

In the 2006 draft state budget, the government had set the assumed world crude oil price at 40 dollars per barrel, while world oil price was continuing to rise and had reached 67 dollars per barrel.

Indonesia is an OPEC member with daily oil output of some 1 million barrels.

Source: Xinhua News Agency - CEIS

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