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World Oil Price and Its Effects on Oil Fuel Subsidy

19 October 2009

JAKARTA. Based on State Budget-Revision (APBN-P) 2009, assumption of ICP was US$ 61/barrel. With average ICP from December 2008 – October 2009 in amount of US$ 56.86/barrel, there is still some room to adapt the oil price increase until the end of this year.
The development of Indonesia Crude Price (ICP) until 31 October 2009 is as follow:
1. ICP October (Provisional) US$ 72.53/barrel.
2. ICP Average Jan-Oct 2009 US$ 58.62/barrel.
3. ICP Average Dec '08-0ct '09 US$ 56.86/barrel.
4. ICP Average Jan-Dec 2008 US$ 96.78/barrel.
5. ICP Average Dec '07-Nov '08 US$ 101.31/barrel.
Oil price development affects state’s earnings from oil and gas as well as energy subsidy. Oil and gas earnings development up to October 2009 reached Rp 124 trillion (64% of State Budget-Revision target of Rp. 186.3 trillion), meanwhile oil fuel and LPG subsidy in the same period reached Rp. 33 trillion (64% from State Budget-Revision top limit).
The low oil and gas earnings realization and utilization of oil fuel and LPG subsidy fund is the result of low oil price early this year and the recent strengthening of Rupiah exchange rate.
Some factors affecting world oil price are demand and supply, oil stock, world economic situation, OPEC reserves production capacity, weather  and disturbance of supply, geopolitics, dollar value and speculations in share market.
Oil price 2010 is estimated at average of US$ 65-70 per barrel, and around US$ 75-85 per barrel in 2012, depends on the pace of world economy recovery. This price level will be higher if dollar continues to weaken.


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