GROSS SPLIT SCHEME ENCOURAGES INVESTMENT IN OIL

by Andi Abdussalam

Jakarta, May 5 (Antara) - The government has changed its production sharing contract (PSC) scheme in its cooperation with contractors (KKKS) in the oil and gas exploration business in the country.          It has introduced the adoption of the Gross Split PSC scheme, replacing the Cost Recovery PSC system, claiming that the investment process has become smoother and many oil working areas have received investment from contractors.          "It is not true that there is only one contractor who has made investment through the gross split system. Since January 2017, up until early in May 2018, there have been 16 working areas that have received investment using the gross split scheme," Agung Pribadi, the head of Information and Public Cooperation of the Energy and Mineral Resources (ESDM) Ministry, said in Jakarta on Friday (May 4).          He made the statement clarifying that the gross split scheme did not discourage businesses to make investment in the oil and gas sector.

PERTAMINA EXPECTED TO EXPAND BUSINESS IN SAUDI ARABIA

By Andi Abdussalam

Jakarta, March 2 (Antara) - Indonesia's state-owned oil and gas firm PT Pertamina is expected to expand business in aircraft fuel sale to Saudi Arabia and cooperate with Saudi firm Aramco in the development of oil refinery plants in Indonesia.          The expectation for Petamina to make investment in Saudi Arabia was expressed by the Ministry of Energy and Mineral Resources (ESDM) on Wednesday, amidst the ongoing visit of Saudi King Salman bin Abdulaziz al-Saud in Indonesia from March 1 to 9, 2017.          Witnessed by King Salman and Indonesian President Joko Widodo (Jokowi) Indonesia and Saudi Arabia signed 11 agreements in the form of memorandums of understanding (MoU) on Wednesday, among others on development funding and civil aviation.          Director General of Oil and Gas of the ESDM Ministry, IGN Wiratmaja hoped that Pertamina would invest in Saudi Arabia, among others on aircraft fuel sale in that country.          "We will continue to encourage cooperation. It should not happen that only Saudi Arabia makes investment in Indonesia, but Indonesia, in this case Pertamina, should also expand aircraft fuel sale to Saudi Arabia," Wiratmaja said in a discussion at the Oil and Gas Building in Jakarta on Wednesday.

2016 OIL PRODUCTION EXCEEDS TARGET

By Andi Abdussalam

Jakarta, Dec 24 (Antara) - Indonesia's oil and gas production this year exceeded the target set in the 2016 revised state budget (APBNP 2016) at 820,000 barrels of oil per day (bpd) and 6,438 million standard cubic feet of gas per day (MMSCFD).         The Upstream Oil and Gas Regulator (SKK Migas) recorded that Indonesia's oil production, as of November 2016, reached 822,000 bpd, while its gas production during the same period stood at 6,643 MMSCFD.          Further, state-owned oil and gas company PT Pertamina set a 2017 net profit target of US$3.04 billion, or Rp40.95 trillion, up six percent from US$2.88 billion in 2016.           Pertamina's net profit growth next year will be supported by a planned income of US$42.59 billion, up 15.01 percent from an estimated US$37.03 billion in 2016.          According to SKK Migas Public Relations Head Taslim Z Yunus,  the oil and oil production target in 2016 could be exceeded, thanks to full operations since January 2016 of Cepu Block's Train B in the Banyu Urip oil field along the border areas of Central and East Java, which has produced 185,000 bpd since January this year.

CEPU BLOCK PROVIDES NEW HOPE FOR LOCALS

By Andi Abdussalam

Jakarta, April 12 (Antara) - Indonesia's Banyu Urip oil field in the Cepu Block in East and Central Java, which saw its maiden 550,000 barrel oil lifting on Sunday, provides new hopes for the locals and the nation.          With an expected 165,000 barrels of oil production per day by the end of 2015, the Cepu Block, which will contribute 25-30 percent to the national oil output, will bring greatest positive impacts on the local people around the operation areas.          "What is important is the social impact of this project where the local people in the operation areas will be happy because the project will function as a new economic driver from the oil and gas sector," Satya Widya, the deputy chairman of Commission VII on energy affairs of the House of Representatives (DPR) said on Sunday.

MAHAKAM BLOCK STILL HAS LARGE OIL, GAS RESERVES

By Andi Abdussalam
Jakarta, Dec 4 (Antara) - The Mahakam oil and gas block in East Kalimantan still has large reserves of oil and gas, even after being exploited by French firm Total E&P Indonesie and Japan's Inpex Corporation for some 50 years.          Total E&P Indonesie, in the remaining two years of its contract, is focusing on the field in an effort to increase its oil and gas production.      Total's oil production is currently some 66,053 barrels per day, a five percent increase from its earlier average daily production of 62,910 barrels per day. It aims to produce 1.7 billion cubic feet of gas in 2014, which will equal its gas production from a year earlier.          As it was known, Total now operates on the basis of a contract with Inpex in the Mahakam oil block. It has invested US$27 billion in exploration activities and contributed US$83 billion (Rp750 trillion) to the state.          The French multinational company was awarded the work contract for the Mahakam block in 1967 for a period of 30 years. In 1997, Total won a 20-year extension for the contract, which is now valid till March 31, 2017.

PERTAMINA EXPECTED TO TAKE OVER MAHAKAM BLOCK

By Andi Abdussalam
Jakarta, Nov 23 (Antara) - State-owned oil and gas company Pertamina is expected to take over the operation of the Mahakam oil and gas block after its contract with operator Total E&P Indonesie expires in 2017.          The Mahakam block in Kalimantan is jointly owned by two foreign oil giants, Total E&P Indonesie of France and  Inpex Corporation of Japan each with a 50 percent split.  Total  is the operator.          In the runup to the end of the work contract, many have suggested that Pertamina should take over the Mahakam Block. Total and Inpex have exploited the oil and gas field for 50 years and contributed about one-third to the country's total gas production.          The gas field should be handed over to state oil and gas company Pertamina to increase the country's oil production and reserves after the subsidized oil fuel price hikes, the Association of Holders of Cooperation Contracts (AK3S) said on Friday.          AK3S chairman Tri Haryadi said after raising the subsidized fuel prices, the government should hand over the Mahakam block to Pertamina.          Pertamina, with support from the country's legislators and observers, has indicated interest in the takeover.          The French multinational company was awarded the work contract for the Mahakam Block in 1967 for a period of 30 years. In 1997, Total got a contract extension for 20 years, until March 31, 2017.

LIMITATION OF DIESEL OIL SALE AFFECTS FISHERMEN

By Andi Abdussalam

Jakarta, 19 (Antara) - State-owned oil and gas company Pertamina's move to limit the sale of subsidized diesel oil has affected fishermen in North Jakarta's Muara Angke Traditional Fishing Port and cut their fish production by about 50 percent.          Some fishermen at Muara Angke have, in the past two months, not taken out their boats for fishing due to scarce diesel oil. Some fishing vessels have had to wait for one month in queue to receive subsidized diesel fuel.          Pertamina has been limiting the sale of its subsidized diesel oil in order to economize on the subsidized quota which, if its sale is not limited, will run out by December 6, 2014.          Fishing vessels have to wait in queue up to one month since Pertamina limited the sale of its subsidized diesel oil last August.          "This happens because the volume of diesel oil distributed to us is less than the need of fishermen at Muara Angke," Bagus Rudiyono, manager of Fishermen's Fuel Refilling Stations (SPBBN) in Muara Angke, said on Thursday.

INDONESIA CONVINCED TO MEET OIL LIFTING TARGET

By Andi Abdussalam

Jakarta, Sept 15 (Antara) - Indonesian oil officials are optimistic that the government will meet its oil lifting target this year, although it fails to meet the target in the first half of 2014.          The government has set an oil lifting target of 818 thousand barrels per day (bpd), yet in the January - June 2014 period, Indonesia was only able to lift 788 thousand bpd.          The target was not achieved because there were constraints such as production disturbance in the first quarter and the decline in the production capacity of a number of wells.          However, Acting Chief of the Upstream Oil and Gas Regulatory Special Task Force (SKK Migas) Johannes Widjonarko expressed optimism that SKK Migas  will achieve the oil lifting target of 818 thousand bpd as outlined in the revised 2014 state budget.          "Although some constraints exist, we are confident that the target will be achieved," Widjonarko said recently.

JOKOWI CALLED ON TO CRACK DOWN ON OIL MAFIA

By Andi Abdussalam
Jakarta, Sept 14 (Antara) - President-elect Joko Widodo, better known as Jokowi, is urged to assign clean ministers from professional circles and fight against oil and gas mafia which controls the country's oil business.        "We hope people appointed as ministers by Jokowi are clean figures from professional circles who have integrity and capability," Director of Indonesia Monitoring Center (IMC) A.H. Wakil Kamal told a press conference on Friday.         Kamal said that Jokowi should appoint clean people to fill in ministerial posts in the ministry of energy and mineral resources, the ministry of state-owned enterprises and other ministries on economic affairs.         "These important positions should be filled in with professionals not with people coming from political parties. These ministries are prone to being used as sources of political funds," he said.         Jokowi should keep distance from those allegedly involved in oil mafia in an effort to create a clean government. Oil mafia operating in the country so far should instead be eliminated.

RI NEEDS TO EXPLORE NEW OIL FIELDS TO INCREASE PRODUCTION

by Andi Abdussalam

Jakarta, May 14 (Antara) - Indonesia needs to boost oil exploration activities to find new oil fields and increase domestic production, so that it can reduce its increasing oil imports.          So far, state-owned oil firm Pertamina has to import some 350 thousand barrels of oil per day (bpd) to meet the country's need for the commodity.          Indonesia needs about 1.6 million barrels of oil for its consumption per day, while its domestic production is only about 820 thousand barrels per day.          It is predicted that Indonesia could import up to 1.8 million barrels per day in 2020.       "If we fail to explore and find new oil fields, we can become the biggest oil importer in Southeast Asia," the senior operation manager of the Joint Operation Board of PT Bumi Siak Pusako (BSP) and state-owned oil firm Pertamina Hulu, Novi Sugiyanto, was quoted by Liputan6.com as saying on Sunday.

INDONESIA NEEDS HARD WORK TO MEET ITS OIL PRODUCTION TARGET

By Andi Abdussalam

Jakarta, March 5 (Antara) - After failing to achieve its oil lifting target last year, Indonesia has set a higher oil production target this year and will need to work hard to achieve it.          Moreover, Indonesia is heading for an energy crisis that can be averted only by increasing its oil and gas production.          According to a deputy at the upstream oil and gas regulator (SKK Migas), Aussie B. Gautama, Indonesia is facing an imminent energy crisis, requiring the country from now on to carry out its own explorations.          The government should encourage Indonesian companies to carry out oil and gas explorations, Aussie said at a panel discussion on "enhance oil recovery (EOR)."     In general, Indonesia could not meet its oil and gas lifting target in 2013, yet for 2014 it set an even higher target that will pose heavy challenges in the oil and gas sector. SKK Migas' acting head Johanes Widjonarko said production in 2013 was below the target set at the 2013 Revised State Budget.          The SKK Migas said the country's oil production in 2013, averaged 825,000 barrels per day falling short or 98.3 percent of the target of 840,000 barrels set in the state budget.          Production of gas also was below target reaching only 1,218,000 Barrels Of Oil Equivalent Per Day (BOEPD), or 98.4 percent of the target of 1,240,000 BOEPD, Johanes Widjonarko said.

CONVENTION CANDIDATES WANT TO END TOTAL OIL CONTRACT

By Andi Abdussalam

Jakarta, Feb 22 (Antara) - Contestants at the ruling Democratic Party presidential Candidate Convention have said they would end the contract of France-based Total E&P Indonesie, operator of East Kalimantan's Mahakam oil block, when it expires in 2017.          At least three of the 11 contestants at the convention, held in Balikpapan, East Kalimantan, said on Saturday that if they are elected president they wanted to hand over the operating rights of the Mahakam Oil Block to state-owned oil and gas firm Pertamina.          Total E&P Indonesie is now focusing on oil fields it is exploiting in an effort to increase its oil and gas production.  It is working to produce 1.7 billion cubic feet of gas in 2014, or equal to its gas production from one year earlier.          Total's oil production is currently some 66,053 barrels per day, or an increase by five percent of its average daily production of 62,910 barrels per day.          Hayono Isaman, one of the 11 participants in the Democratic Party (PD) presidential candidate convention, said that Pertamina was capable of taking over operation from Total in the Mahakam Oil Block in East Kalimantan.          "If am elected president, I will surely entrust it to Pertamina to operate the Mahakam Oil Block," asserted Hayono during the debates held by PD Convention committee in Balipapan on Saturday.

RI OIL PRODUCTION STILL BELOW TARGET

By Andi Abdussalam

Jakarta, March 19 (Antara) - Indonesia's average oil and condensate production up to the first week of March was recorded at 827.200 barrels per day (bpd), below the target set in the 2013 state budget at 900,000 bpd.          However its average natural gas production up to the same period has reached 8,196 million metric standard cubic feet (mmscfd), above the target set in the 2013 state budget at 7,890 mmscfd.          If oil and gas are taken together, Indonesia's average oil and gas production up to the first week of March has reached 2.29 million oil-equivalent barrels per day, slightly above the state budget target at 2.26 million oil-equivalent barrels per day.          The Upstream Oil and Gas Regulatory Task Force (SKK-Migas) has earlier predicted that the realistic calculation for Indonesia's average oil production in 2013 should be set at between 830,000 and 850,000 bpd, and its average gas production at 6,939 mmscfd or 1.24 million oil-equivalent barrels per day.          Thus, the realistic average oil and gas production for 2013, according to SKK-Migas should be set at between 2.07 and 2.09 million oil-equivalent barrels per day.

OIL, GAS MANAGEMENT NEEDS DEFINITE REGULATOR

By Andi Abdussalam

Jakarta, Dec 21 (ANTARA) - Observers have suggested that the government should appoint a definite state institution to handle the country's oil and gas business after the Constitutional Court (MK) dissolved last month the Upstream Oil and Gas Regulator (BP Migas).          In the wake of the dissolution of the BP Migas on November 12, the government set up the Interim Working Unit for the Implementation of Upstream Oil and Gas Activities (SKSP Migas), under the Ministry of Energy and Mineral Resources, which took over the functions of BP Migas.          However, SKSP Migas is an interim body and must be replaced by a state-owned entity that should exclusively handle upstream oil and gas activities. The role of BP Migas is expected to be taken over by state-owned oil and gas company Pertamina.          "The dismantled BP Migas, whose role is being taken over by the SKSP Migas, should be replaced by Pertamina, as per the rules of the Constitution," said Marwan Batubara, the executive director of Indonesian Resources Studies, on Thursday.

BP MIGAS DISSOLUTION NOT TO DISRUPT OIL BUSINESS

By Andi Abdussalam

Jakarta, Nov 14 (ANTARA) - The government has given the assurance that the dissolution of BP Migas,  the upstream oil and gas regulator, by the Constitutional Court (MK) on Tuesday would not disrupt oil and gas business activities, and all work contracts will remain effective.   Oil and gas activities, including exploration and exploitation, will not be disrupted in the wake of the Constitutional Court's ruling that led to the dissolution of BP Migas, according to Coordinating Minister for Economic Affairs Hatta Rajasa.          The chief economic minister said that the government had decided to establish a new unit to regulate the nation's upstream oil and gas sector, after BP Migas was dismantled by the MK.   "The new Unit for the Implementation of Upstream Oil and Gas Activity will be overseen by the Ministry of Energy and Mineral Resources. This is in accordance with the Constitutional Court's decision," he added.           Hatta stated that oil and gas activities will not be disrupted because the Ministry of Energy and Mineral Resources will take over the duties of the erstwhile oil and gas regulatory agency and continue the exploration and production activities.

OIL PRODUCTION LIKELY TO FALL BELOW TARGET

By Andi Abdussalam

Jakarta, Oct 21 (ANTARA) - The country's oil output this year is most likely to fall below the production target as set in the 2012 revised state budget at the average of 930,000 barrels per day.          Until October 11, 2012, realization of oil reached 867,080 barrels per day, so that the Upstream Oil and Gas Regulator (BP Migas) has predicted that by the end of the year production may only reach 870,000 barrels per day.          The total is 3.6 percent lower than last year's realization which was recorded at 902,000.          Compared to the target set at 930,000 barrels per day in the revised 2012 budget the projection would be 6.5 percent lower.          Due to several factors, it seems that the government faces difficulties in raising natural oil production. It has faced these difficulties in the past several years and will still face it at least until sometime in the future.          "Seeing its condition, it would be difficult for the government to increase oil output," Dito Ganinduto of the House of Representatives (DPR)'s Commission VII on energy affairs, said here on Sunday.          He said the effort to cut production decrease from 10-12 percent to 3.6 percent in 2012 was already an optimal one. According to him, naturally, the decrease of oil production would reach 10 - 12 percent.          The Upstream Oil and Gas Regulator (BP Migas) in its report to the DPR Commission VII indicated that the 2012 oil production was estimated to reach 870,000 barrels per day, declining by 3.6 percent compared with the realization in 2011 which reached 902,000 barrels per day.          According to BP Migas Chief R Priyono, the drop in the production this year was caused by a break in the TGI pipe at PT Chevron Pacific Indonesia on September 29, 2010 and a fire at the Lentera Bangsa terminal at CNOOC causing production loss of 9,000 barrels per day.         Unplanned shutdown in almost all KKKS (production sharing contractors) facilities has also caused a loss of 10,000 barrels per day while delay in rig procurement at Chevron Makassar, Vico, Santos Sampang and Pertamina has caused a loss of 5,300 barrels per day, he added.          BP Migas predicts the biggest oil production of KKKS in 2012 would be that of Chevron Pacific Indonesia at 343,212 barrels per day, followed by PT Pertamina EP at 127,889 barrels per day, Total EP Indonesie 66,400, ConocoPhillips Ind Ltd. 44,306 and PHE-ONWJ at 34,056 barrels per day.          Besides, contract extension has also caused a delay in the drilling of 5,500 barrels per day in the West Madura Offshore and a decline in production at Tunu, Peciko, KE-38 and other fields by 6,500 barrels per day, he said.         Oil and gas production this year meanwhile is estimated at 2.367 million barrels equivalent oil a day, down by 1.6 percent from last year's which was recorded at 2.405 million barrels equivalent oil  per day.         Priyono said without optimization, this year's production would reach only 757,000 barrels per day.         However through optimization production could be increased by 173,000 barrels per day to reach 870,000 barrels per day until the end of this year, he said.          According to legislator Dito Ganinduto, the production prediction at 870,000 barrels per day by the end of the year would constitute the maximal efforts by the government to reduce the decline.          "It is now difficult to raise production now. The decline by 3.6 percent of oil output in 2012 is already an optimal effort," he said.          However,  Dito expressed hope that  oil output would increase again when the Banyuurip oil field in Cepu, began its estimated production of 165,000 barrels per day in 2014.          Besides, Indonesia should also increase explorations and exploitations of new wells or oil fields. In this case the government continues to cultivate new oil blocks.          The oil blocks included those located in various areas  on and off Sumatra  and Kalimantan, Makassar Strait of Sulawesi, Java Sea, off East Nusatenggara and off Natuna and Papua.          Tenders would be held for the blocks, on shore and offshore, between October 2012 and February, 2013 under production sharing scheme.          In addition, the Indonesian government has also offered 23 new oil and gas blocks to Russian investors, according to the Indonesian embassy in Moscow said.          The offer was made on the occasion of a Russian Oil & Gas Conference & Exhibition held in Moscow, embassy secretary  Enjay Diana said to ANTARA news agency in London recently.          Indonesian government officials and oil industrialists took part in the three-day exhibition and conference ending October 18, Enjay said.          In the meantime, State Enterprises Minister Dahlan Iskan has expressed hope that state-owned companies would win oil and gas tenders offered by the government.          He asked seven state firms to take part in tenders for projects worth Rp200 trillion at the Upstream Oil and Gas Regulating Body (BP Migas).       State industry engineering company PT Rekayasa Industri has been appointed a leader of the seven state firms to take part in the tenders, he said.          The other six state firms are state oil and gas company PT Pertamina, insurance company PT Asuransi Jasindo, and construction companies PT Waskita Karya, PT Wijaya Karya, PT Adhi Karya, and PT Hutama Karya.          PT Rekayasa Industri was appointed chief because it had the highest capacity among the seven state firms to carry out projects in the oil and gas sector, he said.        Therefore, PT Rekayasa Industri must soon hand a list of clusters the state firms can carry out, he said.         "We ask BP Migas to inform the state firms of what it can cooperate with the state firms so the Rp200 trillion projects will go to domestic companies," he said.***2*** (T.A014/A/A014/O001) 21-10-2012 20:54:0

SUBSIDIZED FUEL QUOTA MAY BE RAISED TO 44 MLN KILOLITRES

By Andi Abdussalam

Jakarta, Sept 7 (ANTARA) - The number of vehicles in Indonesia has increased by 8 percent or about 800,000, boosting yearly fuel oil consumption to about 60-66 million kilolitres, of which about 64 percent has to be subsidized.          In the 2012 revised state budget, fuel oil subsidies were set at 40 million kilolitres (worth Rp137.5 trillion). However, as of the end of August, about 29.32 million kilolitres of the subsidized fuels have been already consumed.          The government has predicted that by the end of the year subsidized fuel consumption will reach 45-46 million kilolitres, exceeding the amount set in the revised state budget.          Therefore, the government is making a proposal to the House of Representatives for an additional subsidy of 4 million kilolitres of fuel, worth Rp12 trillion. It will also launch a consumption efficiency programme to cover the shortage of 2 million kilolitres.          According to Bambang Brodjonegoro, the head of the finance ministry's fiscal policy agency (BKF), the government's plan to raise the quota of subsidized fuel oil by 4 million kilolitres will increase the fiscal burden by Rp12 trillion.          "It will be around Rp12 trillion. Every increase of 1 million kilolitres will raise the budget by Rp3 trillion," he stated here on Thursday.          "The government had predicted that the demand for subsidized fuel oils would exceed the quota and it had therefore estimated the extra fiscal burden on the state budget by taking into account the exchange rate, Indonesian Crude Price (ICP) and volume of subsidized fuel oils,¿ Bambang said.          "What is important is that the deficit will not exceed 2.3 percent even in the worst-case scenario," he added.          Earlier, Deputy Minister of Energy and Mineral Resources Rudi Rubiandini stated that subsidized fuel consumption would exceed the targeted quota of 40 million kilolitres. By the end of the first half of the year, subsidized fuel consumption reached 21.6 million kilolitres.          "If this figure is multiplied by two for the rest of the year, it would reach 43.2 million kilolitres. In addition, there is an increase in the number of motor vehicles and cars," he pointed out.         According to the latest data from state-owned oil and gas firm Pertamina, as of the end of August, the total distribution of subsidized fuel has reached 29.32 million kilolitres, including 18.44 million kilolitres of Premium gasoline, 10.06 million kilolitres of diesel oil, and 700,000 kilolitres of kerosene.          In the worst-case scenario, Rudi said, subsidized fuel consumption would reach 45 million kilolitres, forcing the government to bear an additional burden of 5 million kilolitres.          "If the prediction of 44-45 million kilolitres is correct, the burden will increase by 5 million kilolitres. This is without factoring in possible oil price hikes in the future," he added.          Therefore, the government has made a proposal to the House of Representatives for an additional subsidy of 4 million kilolitres of fuel. With the addition of 4 million kilolitres, the total quota of subsidized fuel oil will reach 44 million kilolitres.          "If the use of subsidized fuel oils at ministries and institutes is not controlled, the quota may even reach 46 million kilolitres," Rudi warned.          Therefore, the government will launch a consumption efficiency programme in its efforts to save about 2 million kilolitres of subsidized fuel in 2012.       "Without it, consumption will reach 46 million kilolitres. We can cut the predicted consumption to 44 million only with the launch of the efficiency programme," Rudi said in Hamburg earlier this month.          He noted that the government had banned government vehicles in Jakarta and its satellite towns of Bogor, Depok, Tangerang and Bekasi from using subsidized fuels since June 1, 2012, ¿Other areas in Java and Bali were also included since August 1, 2012," Rudi said.          Vehicles belonging to mining and plantation firms have also been prohibited from using subsidized diesel oil with effect from September 1, 2012.          Meanwhile, as part of the efficiency programme, the Downstream Oil and Gas Regulator BPH Migas will issue a regulation on subsidized fuel quota for cars.          "As per our plan, car owners would be allowed to buy only up to 10 litres of subsidized premium gasoline or diesel oil per day from refuelling stations," the Fuel Oil and Gas Affairs Director of BPH Migas, Djoko Siswanto, said.          The regulation is aimed at curbing the consumption of subsidized gasoline and diesel oil. Domestic sales of subsidized gasoline and diesel oils are expected to exceed the quota set in the state budget.          "The quota system will be announced soon - first in Jakarta and then in other regions. The implementation of the regulation is pressing in Jakarta, as the subsidized gasoline quota for the city is expected to be exhausted by mid-September,¿ Djoko explained.          He said BPH Migas would also ban luxurious cars from using subsidized fuels. "Car categorisation would be done on the basis of engine capacity, year of production, price," he added.          If the House of Representatives rejects the government¿s proposal for an additional subsidy of 4 million kilolitres of fuel, the government will have to implement a plan to reduce kerosene quota in order to pay for the additional gasoline and diesel fuels.          Evita Legowo, the general director of Oil and Gas at the Energy and Mineral Resources Ministry, said the conversion of quotas would be implemented to ensure a regulated supply of fuel oil for the country's citizens.         "However, the Ministry is optimistic that the parliament will agree to raise the quota, so we actually won¿t need do the conversion. We will see what the parliament members have to say on Monday," she stated.         The consumption of subsidized gasoline and diesel fuel in Indonesia is expected to surpass the designated quota, while the consumption of kerosene has been far less than the quota set in the 2012 revised state budget.        "Therefore, the kerosene-to-gasoline conversion needs to be implemented," Legowo noted.***2*** (T.A014/INE/KR-BSR/A/A014) 07-09-2012 18:

GOVT WARNED TO WATCH FOR FUEL HOARDERS

By Andi Abdussalam

Jakarta, March 31 (ANTARA) - Even though the government has delayed its plan to raise fuel oil prices on April 1, 2012, fuel oil hoarding cases still continue to take place in various parts of the country.          Police in East Java and in West Sumatra, for example, said on Saturday they had uncovered numerous cases and arrested fuel hoarders. Further, police seized 1.2 tons of subsidized premium gasoline and arrested suspects in Surabaya and in West Sumatra.          Also, West Sumatra Police have uncovered eight cases of fuel oil hoarding, according to  West Sumatra Regional Police Spokesman Adjunct Senior Commissioner Mainar Sugainto. The police have taken into custody 18 suspects who were in possession of the fuel oil along with the drivers of trucks transporting the hoarded fuel.          Therefore, workers organizations have warned the government of the possibility of speculators hoarding fuel after the House issued a decision that allows the government to increase fuel oil prices, its secretary general said.          Secretary General of the All Indonesian Workers Association (OPSI) Timboel Siregar said  on Saturday that following the House of Representatives (DPR)'s decision to insert a clause in the Revised 2012 Budget Law, cases of subsidized fuel oil hoarding were expected to increase.           The DPR on Friday held a plenary session to consider a government proposal to raise fuel oil prices on April 1, 2012. The House voted to insert a 6a clause in Article 7 of the 2012 Revised Budget, which gives the government the authority to make price adjustments, or price increases, if the Indonesian Crude Price (ICP) increased or fell by 15 percent during the current six months from the assumed price in the state budget.          "This will obviously trigger acts of hoarding because speculators will wait, since prices will increase after six months and this will create a disadvantage for the people," Siregar said.          So far, fuel oil hoarding has been occurring. Banjarmasin police in South Kalimantan province confiscated two tons of diesel oil and premium gasoline in Banjarmasin city, the South Kalimantan provincial capital.  Police also received reports on the hoarding of thousands of liters of fuel oil from local residents who have become uneasy due to the activity of three hoarders who had already been arrested by the Banjarmasin police.          In the meantime, local police closed a premium, oil and diesel fuel distribution agent (APMS) in Siak district of Riau province for allegedly hoarding gasoline before the government's plan to raise national fuel price had been enacted.          "We have closed the fuel distribution agent for further investigation," said local police spokesperson Adjunct Commissioner R Simamora.          Earlier, police had conducted surveillance of the hoarding of subsidized fuel, using a boat in Masjid Gulf at Sungai Apit sub-district, Siak.  From the surveillance, police arrested two suspects, identified as AI and AB. In that raid police also confiscated 23 tons of government's subsidized fuel expected to be hoarded, which consists of 13 tons of diesel fuel and 10 tons of gasoline.          Additionally, police seized a fuel container ship, a wooden barge unit, and five fuel pumps.          Police in Bojong Gede south of Jakarta have also arrested a 65-year-old man, identified by his initials as GM, on charges of hoarding 3,400 liters of subsidized fuel.          GM was being held at the Bojong Gede police precinct's cell, chief of the Depok police resort Snr Comr Mulyadi Kaharni said.  Police also confiscated 3,400 liters of gasoline from GM at his house in Sasak Panjang village, Bogor district, West Java.          Actually, state oil company PT Pertamina (Persero) has anticipated subsidized fuel oil hoarding in connection with the government's April 1, 2012 fuel oil plan.          Pertamina's spokesman Harun said he had coordinated with the upstream oil and gas coordinating company (BPH Migas), along with police and regional administrations, to prevent hoarding of subsidized fuel oil.          "Hoarding not only harms subsidized fuel oil consumers, but is also risky to the safety of the environment because fuel oil is inflammable," he said.          He added that Pertamina has also called on the Association of National Oil and Gas Entrepreneurs (Hiswana Migas), as owners of public fuel oil filling stations (SPBU), to tighten the channeling and distribution of subsidized fuel oil, including forbidding the sale of subsidized fuel oil by using jerry cans except for people living far from the filling stations and having written authorization from the police and local administrations.          Officials anticipate that hoarding should be expected since fuel oil consumption in January-February 2012 will reach 12 percent above consumption in the same period last year. The distribution of fuel oil in the first two months of 2012 reached 7.02 million kiloliters, or 18.79 percent of Pertamina's quota in the 2012 State Budget. This is 755,000 kiloliters higher than in the same period last year, reaching 6.26 million kiloliters.          Despite the fact that Pertamina has taken preventative steps, hoarding of fuel oil still took place in various parts of the country. Therefore, the government has stressed that it will take firm action against hoarders.          Further, Vice President Boediono has said the government will act against those hoarding fuel, as it has done in other regions. "The government will surely enforce the law to safeguard the use of fuel oils based upon their initial purposes," the vice president said.           The vice president admitted that in the run-up to the planned fuel oil price hikes certain parties had hoarded fuel oils to illegally benefit from the planned price increase.          According to Boediono, the amount of fuel hoarded is not small and a certain amount of fuel often 'disappeared' during delivery to fuel oil stations or during trips to the sea.          "There are many illegal ways to earn personal benefits and I agree, if the actors are sanctioned based upon the law," he stressed.***2*** (T.A014/a/INE/a014) 31-03-2012 20:45:

INDUSTRY MUST BRACE FOR FUEL OIL PRICE HIKES

Andi Abdussalam

Jakarta, March 24 (ANTARA) - Industries must brace themselves to face subsidized fuel price hikes of about 33 percent next month, despite predictions they will not be largely affected.          "Industries, particularly the food and beverage industries, are challenged by the increase caused by the fuel oil price hikes. While consumers' purchasing power will weaken, industries will also face increasing transportation costs," Benny Wahyudi, director general for agro-industry affairs, said over the weekend.          The director general predicted that the growth of the food and beverage industries will slow this year from 9.19 percent in 2011 to 8.15 percent.          But his colleague Dedi Mulyadi, who is director general for regional industry development affairs, said that, overall, fuel oil price hikes will not largely affect Indonesia¿s industries.          He explained that even if the government raises fuel oil prices and electricity tariffs, it would not have much effect on industries in the country. "If the government raises fuel oil price by Rp1,500 per liter and the electricity tariff by 10 percent, simultaneously, it will cut output in the  industrial sector, but its percentage will only be small, just about -0.26 percent," Dedi Mulyadi said.          Though this week, rallies opposing the government's plan to raise fuel oil prices continue across the country. Demonstrators claimed the policy would cause commodity prices to increase and burden the public.          The government is planning to raise the price of subsidized fuel oil on April 1 and has submitted two options to the House of Representatives (DPR). In the first proposal, the government seeks to raise the price of subsidized premium gasoline from Rp4,500 to Rp6,000 per liter, and diesel oil from Rp4,500 to Rp6,000 per liter.         Industrialists in the food and beverage sectors concurred with Director General Dedi Mulyadi's view, saying fuel price hikes will not seriously affect them.         "The increase in fuel prices will not affect industries too much, possibly only about three percent on distribution, because industries have used international price standards since November 2011," Secretary General of Food and Beverages Businesses Association Franky Sibarani said.            Further, the fuel oil price increase is expected to only affect the transportation sector of the industries, or distribution costs, he said.  Sibarani noted that the increase in the prices of food and drink could not be caused by only one factor, but there must be a number of events that contribute to such increases.           "If increases happen, it would not be because of fuel oil price increases, but due to the increase in packaging prices as a result of the hike in the world crude price or of the increase of sugar prices and other factors," he added.         Director general Dedi Mulyadi pointed out that his analysis was based on a computable general equilibrium (CGE) comparative static analysis developed by the University of Gajah Mada.         "It is simulated in the analysis that fuel oil prices increase 33 and 44 percent, or Rp1,500 and Rp2,000 per liter, while electricity increases to 10 percent," Dedi said.          Based on the analysis, the largest impact will be suffered by metal and steel industries, by -1.3 percent if fuel prices rise to 33 percent and the electricity tariff to 10 percent. Additionally, the impact will be -1.39 percent if fuel oil prices rise to 44 percent and electricity tariff increases to 10 percent.          An increase of fuel oil prices by 33 percent and the electricity tariff by 10 percent is expected to reduce the real gross national product (GNP) by -0.163 percent due to the predicted drop in household consumption by -0.160 percent, exports by -0.221 percent and investment by -0.160 percent.          The ministry of industry's analysis also concluded that an increase of fuel oil prices by 33 percent or 44 percent will have a direct impact on the increase in the transportation costs, seeing an increase of 19.6 percent or 23.8 percent.          Therefore, in order to assist domestic industries in overcoming the impact of the fuel oil price hikes, the public¿s consumption needs to be directed to the purchase of locally made products to boost the nation's economic development.          "Our annual consumption expenditures amount to Rp4 thousand trillion, of which 56 percent are contributed by the local currency rupiah," Fauzi Azis, an expert in marketing and domestic consumption promotion affairs of the ministry of industry, said at a press conference during the launch of  "Made in Indonesia Expo 2012" last week.          The data indicates the large potential the Indonesian people have on product consumption. "Thus, it is very important to promote domestic products to local consumers, including food and beverage products," Fauzi said.          Further, the growth of the food and beverage industries is predicted to slow this year. According to Agro-Industry Director General Benny Wahyudi, his ministry's long-term plan has set a growth target of 8.15 percent in the food and beverage sectors.          "We have to set the target at a minimum growth of 8.15 percent," he pointed out.***2*** (T.A014/INE A/O001) 24-03-2012 14:31:

GOVT KEEPS OPEN OPTION FOR HIKING FUEL PRICES

by Andi Abdussalam

Jakarta, Feb 14 (ANTARA) - Although it has plans to begin limiting  subsidized fuel oil consumption next April, the government will continue to maintain the option of raising fuel oil prices, particularly subsidized premium gasoline prices, rather thanputting in place the consumption limitation scheme.          The government is considering these options following the request of many experts and legislators who believe that hiking prices would be more advantageous than limiting the volume of subsidized fuel consumption.          For this purpose, the government is creating three scenarios to prepare for a hike to prices of subsidized premium gasoline, as part of efforts to curb fuel subsidies.          Actually,  President Susilo Bambang Yudhoyono has signed Presidential Regulation No 15 of 2012 on retail and consumer prices of certain types of subsidized fuel oils. "I have signed the Presidential Regulation," President Yudhoyono said on Monday.          Based on Regulation No. 15 of 2012, the government set the retail sales price of certain fuel oils. The price of kerosene has been set at Rp2,500,  premium gasoline Rp4,500, and diesel oil Rp4,500, including the 5 percent tax.          Under Presidential Regulation No 15 of 2012 it was also said that the use of certain fuel oils would be limited in stages.          However, according to Coordinating Minister of Economy Hatta Radjsa, the government is still open to the option of raising prices of subsidized premium gasoline, as opposed to limiting itsconsumption.          Further, President Yudhoyono has said the government is seriously thinking of price adjustments, particularly a price increase is being seen as the best option.          "When the time comes, I will be responsible for whether or not there will be an increase. Now the important thing is to accelerate the conversion of fuel oils into gas fuel," the President said.          The government is planning to restrict the use of subsidized gasoline to public transport and motorcycles as of April 1 in aneffort to cut oil subsidies, which have been a burden on the state budget.          Also, private cars are expected to switch to using high octane pertamax or gas, as called for in the government's fuel-to-gas conversion program.          Based on Law No. 22 / 2011 on the 2012 state budget, the government is required to limit subsidized premium gasoline consumption in Java and Bali as of April 2012.          The program will start in Jakarta and its buffer towns of Bogor, Depok, Tangerang and Bekasi (Jabotabek) as of April 1, 2012. By June it will cover Surabaya in East Java in June and the whole Java and Bali at the end of 2012.          Also, premium gasoline consumption cuts in Sumatra will begin in April 2013  and diesel consumption limitation in June 2013.          The government decided to limit subsidized fuel consumption because purchases of subsidized fuels in 2011 reached 41.7 million kiloliters, or about 103.3 percent of the 2012 revised budget quota.          However, the House of Representatives (DPR) Commission VII earlier asked the government to study the possibility of fuel oil price hikes as one of the options to limit the use of subsidized fuels.          Teuku Riefky Harsya chairman of Commission VII said his commission was of the view that the government needed to reassess its plan after hearing reports from the energy minister and from other stakeholders such as BPH Migas (oil and gas regulator), state-owned  oil firm PT Pertamina, Hiswana Migas, Indonesian Chamber of Commerce and Industry (Kadin), Apindo, Gaikindo, representatives of small businesses (UKM) and energy experts.          "We heard from stakeholders saying it would be too expensive and unjust for private four-wheel vehicles to switch from premium gasoline to pertamax," he said, since pertamax's price per liter is currently about 9,500, while subsidized premium is only Rp4,500 per liter.          However, the government should proceed with its plan to limit consumption and continue with its schedule for April 1, 2012 based on Law 22 / 2011 on the 2012 state budget, according to Teuku Riefky.          "We are of the view that raising the fuel oil price is against the law," he said.          Therefore, according to oil expert Kurtubi, who is also director of the Center for Petroleum and Energy Economics Studies (CPEES), the government and the parliament can revise Law No. 22 / 2011 regarding the state budget through the acceleration of the 2012 Budget Amendment discussion, which he said is a legal umbrella to raise fuel prices.          Moreover, raising prices is more advantageous than a policy to limit their consumption, an economic observer said.          "Based on economic calculations, raising fuel oil prices is a more rational policy. There will be no need to prepare infrastructure and monitoring instruments," Komaidi Notonegoro of  the ReforMiner Institute said during a discussion at the Economic Journalists Communication Forum.          He additionally said if prices of subsidized premium gasoline and diesel oil were raised by Rp1,000 per liter, there would be a savings on a national scale of Rp38.7 trillion, and if they were increased by Rp1,500 per litter, the country would see a savings of  Rp57.4 trillion.          But such a fuel oil price hike would also cause  an increase of 1.07 percent in inflation,  if the price increase was Rp1,000 per liter, and an increase of 1.58 percent, if the price increase was Rp1,500 per litter.          He further said that limiting the purchase of subsidized premium in Java and Bali would only save Rp26.71 trillion and Rp41.91 trillion if diesel consumption was also cut.          In this case, the government is now considering an option to raise prices. For these discussions, it has appointed a consortium consisting of the Bandung Institute of Technology (ITB), University of Indonesia (UI) and Padjadjaran University (Unpad), along with the Oil and Gas Institute of the Energy and Mineral Resources Ministry, to conduct the study according to the DPR's request.          Deputy Minister of Energy and Mineral Resources  Widjajono Partowidagdo said on Monday that the government is also discussing the possibility of raising the price of subsidized fuel oil for public transport vehicles, including small-scale business vehicles, by providing cash back as compensation.          "If the increase is Rp1,000 per liter, the cash back will be as much as that amount," he said.***2*** (T.A014/INA/F001) 14-02-2012 14:49