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Oil & Gas Journal

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.

"I am sure we can be self-sufficient by 2010 if we can start new plants in Cepu and Natuna to produce oil immediately," said Kalla. "This is the only way we can satisfy domestic needs safely, while avoiding imports to get out of skyrocketing oil prices."
Pertamina Deputy director Iin Arifin Tahian said production would be enhanced in other units across the country to achieve Kalla's target.

Meanwhile, Pertamina processing unit director Rukmi Hadi Hartini said Balikpapan's unit could increase production to 300,000 b/d by next year from 260,000 b/d by upgrading the plant and its machinery. "By cutting costs, we can, for instance, save some $87 million a year, and use it for enhancing plant capacity," she said.

The government recently announced plans to raise domestic fuel prices in June due to the upward trend of global oil prices. It said the price of premium gasoline would be raised to 6,000 rupiah/l. from 4,500 rupiah/l.; diesel oil to 5,500 rupiah/l. from 4,300 rupiah/l.; and kerosine to 2,300 rupiah/l. from 2,000 rupiah/l.

On May 5, hundreds of people protested outside the presidential palace in Central Jakarta opposing the government's plan to raise fuel prices and urging the government to lower food prices instead.

Similar rallies against the planned fuel price hikes were reported in Yogyakarta, Pekanbaru in Riau Province, Surabaya in East Java, West Sumatra, Banjarmasin in South Kalimantan, and Makassar in South Sulawesi.

Contact Eric Watkins at hippalus@yahoo.com.