Eric Watkins
Senior Correspondent

LOS ANGELES, May 14 -- The Indonesian government, facing widespread public protests over planned fuel price hikes, aims to lower its costs by reducing expensive imported oil and increasing the country's production to 1.2-1.5 million b/d by 2010 from the current 920,000 b/d.

Indonesian Vice-President Jusuf Kalla told officials of state-owned PT Pertamina to increase production levels to reduce dependence on high-cost imported oil and to ease state subsidies.

Kalla told Pertamina officials to forget prioritizing production share from foreign partners and allowing self-sufficiency to slide. "Previously, we could just ask for a share from our partner, and then sit back to wait for the profits," Kalla said. "With such a high oil price, and our low production capability, we can't do that anymore," he said.

To increase production, Kalla said, Indonesia must produce more at all six of Pertamina's units in Balikpapan, East Kalimantan, Riau, South Sumatera, Balongan in West Java, Cilacap in Central Java, and Papua.