RI expects $36 billion from oil and gas sector

28 December, 2012 | Source: The Jakarta Post

The government expects that state revenues from the oil and gas sector will reach US$36 billion this year, exceeding the initial target despite a decline in oil production.


Energy and Mineral Resources Minister Jero Wacik, who is also the chief of the country’s interim upstream oil and gas regulatory task force SKMigas, said on Thursday that the estimated year-end state revenues (both tax and non-tax receipts) from the oil and gas sector were 8 percent higher than the initial target in the 2012 state budget.

“Initially, the state revenue from the sector was projected at $33.48 billion, which means the realization of $36 billion in revenue is 108 percent of the original target,” he said in an email sent to The Jakarta Post.

SKMigas has yet to reveal the composition of tax and non-tax income from this year’s projected revenues.

The country’s oil production fell short of expectations, but the rise in crude oil prices managed to boost state revenues from oil and gas sales. The Indonesian Crude Price (ICP) from January to Dec. 24 stood at $112.70 per barrel, or 6 percent above the government’s assumption of $105 per barrel.

In March this year, the ICP surged to $128 per barrel before dropping to $99.08 per barrel in June amid fluctuations in global oil prices.

The projected state revenue from the sector comprises 58 percent of the sector’s gross revenue, which reached $63 billion, according to information from SKMigas.

Approximately $10.6 billion or 16 percent of gross revenue will go to oil and gas contractors, while 26 percent or $15.5 billion will go to the cost recovery scheme. Under the production sharing contract (PSC) scheme, the government reimburses most of the production costs incurred by oil and gas contractors.

The Finance Ministry previously expected state revenues from the oil and gas sector to be Rp 278 trillion or $30.8 billion under the 2012 state budget’s assumption of a rupiah exchange rate of Rp 9,000 per dollar.

Of the Rp 278 trillion target, some Rp 67.91 trillion is expected to come from income taxes, Rp 150.84 trillion in non-tax revenues from the oil sector, Rp 47.46 trillion in non-tax revenues from the gas sector and Rp 11.79 trillion in other non-tax revenues from domestic market sales.

Indonesia’s crude oil output is only expected to reach 860,000 barrels per day by the end of this year — 8 percent short of the government’s original target of 930,000 barrels per day and down by 4 percent from last year’s level.

Aging fields and unplanned shutdowns, such as damage to a pipeline belonging to Chevron Pacific Indonesia (CPI), a subsidiary of the US-based energy giant Chevron, at the firm’s facility in the Duri field in Sumatra, were blamed for the decline in output.

In 2013, the government expects $31.75 billion in state revenue from the oil and gas sector, after 17 percent or $9.7 billion of the total revenues from the sector goes to oil and gas contractors and 27 percent or $15.5 billion goes to the cost recovery scheme.

The 2013 target is 12 percent lower than expected state revenue realization this year, due in part to the fact that the government’s ICP assumption for 2013 has been set at $100 per barrel, some 5 percent lower than the assumption for the previous year.

 

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