The Government and DPR Agree on the ICP in the Macro Assumptions of the 2023 State Budget of 95 US Dollars per Barrel

JAKARTA - The Minister of Energy and Mineral Resources (ESDM) and Commission VII of the House of Representatives of the Republic of Indonesia have agreed on the basic assumption of the Indonesian Crude Price (ICP) for the 2023 State Budget and Expenditure Draft (RAPBN) of 95 US dollars per barrel.

This figure is higher than the ICP in the 2022 state budget, which is 63 US dollars per barrel.

This stipulation also increased by 5 US dollars per barrel from the previous proposal, which was 90 US dollars per barrel when the President of the Republic of Indonesia Joko Widodo delivered a speech on Submission of Government Information on the Bill on the State Budget for Fiscal Year 2023 along with its Financial Note at the Plenary Meeting of the Opening of the First Session of the Indonesian House of Representatives for the 2022-2023 Session Year on August 16, 2022.

"In principle, the government has agreed (to fix the ICP price)", said Arifin in a statement to the media, Friday, September 9.

Arifin emphasized that global market instability due to geopolitical tensions have pushed world oil prices to fluctuate.

"The conditions both in terms of demand and world oil prices are uncertain, they change every day", he explained.

The determination of the basic assumption of ICP at the level of 95 US dollars per barrel, continued Arifin, anticipates an increase in world oil consumption at the end of the year ahead of entering winter and the disruption of the supply sector from Russia.

On the other hand, OPEC+ is also controlling the production rate to be able to contain world oil prices. "Even if there is a decline in oil prices, there may be indications of inflation so that demand will also fall", said Arifin.

In addition to the ICP, the Government and the Indonesian House of Representatives are targeting the lifting (ready to sell) of oil and natural gas in 2023 to be set at 1,769,000 barrels of oil equivalent per day (BOEPD), consisting of oil lifting of 660,000 barrels per day and natural gas lifting of 1,100,000 barrels. oil equivalent per day.

This decision was agreed upon seeing that the realization of lifting until August 2022 reached 1,562 million barrels of oil equivalent per day, of which the realization of oil lifting was 606,000 barrels of oil per day and natural gas lifting of 956,000 barrels of oil equivalent per day.

Meanwhile, the outlook for oil and gas lifting in the 2022 State Budget alone is 1.597 million barrels of oil equivalent per day, consisting of oil lifting of 633,000 barrels of oil per day and natural gas lifting of 964,000 barrels of oil equivalent per day.

The government also continues to encourage Cooperation Contract Contractors (KKKS) to increase oil and gas production through the determination of cost recovery in 2023 of 8.50 billion US dollars.

In order to optimize oil and gas production, the Minister of Energy and Mineral Resources encourages the use of modern technology to be applied to old wells.

This achievement is expected to be in line with the government's target of realizing oil production of one million barrels per day in 2030.

"We can see that our oil sources are old, we need hard efforts with new technology which of course will cost money. We are indeed working to achieve the target of one million barrels per day in 2030", explained Arifin.

Arifin explained that achieving the target of one million barrels per day takes a relatively long time.

"To be able to pump oil it takes 7-10 years starting from discovery, exploration and exploitation. And we have indications of new wells that we can try to accelerate", he said.