Ministry explains solutions for oil and gas trade balance deficit

September, 13 2018 | 00:03 am (Photo courtesy of Esdm)
(Photo courtesy of Esdm)

Until fairly recently, oil has remained one of the state revenue’s biggest contributors. According to data from the Finance Ministry, in the first semester of 2018, oil contributed 34 percent to national non-tax state revenue realization. National companies also manage our oil resources well, carrying the mandate outlined by the 1945 Constitution’s Article 33, Paragraph 3 — that the nation has to manage natural resources effectively to maximize its social welfare benefits.

Vice Energy and Mineral Resources Minister Arcandra Tahar explained that in the second quarter of 2018 the Indonesian oil and gas trade balance recorded a deficit amounting to US$0.27 billion. He continued that despite the trade deficit, in the second quarter of 2018 the oil and gas sector had generated state revenue totaling $6.57 billion.

In order to address the oil and gas trade deficit and prevent it from causing a foreign exchange reserves deficit, the ministry has mainstreamed the use of the B20, or 20 percent blended biodiesel, among privately owned motor vehicles. According to the ministry’s calculation, B20 adoption as an alternative fuel could preserve Indonesia’s foreign exchange reserves by US$2 billion in 2018 and US$3.5 billion in 2019.

The ministry’s public information services, communications and partnership bureau chief Agung Pribadi said he was optimistic that the oil and gas sector would continue to grow positively throughout the year, in keeping with the positive signals it was generating in the first semester of 2018.

“With the same level of oil and gas sector growth, let us assume that it will only have a trade deficit of US$0.5 billion at the end of the year, which will clearly decrease the burden that the deficit imposes on Indonesia’s foreign exchange reserves,” Agung said.

“Taking these things into consideration, should we increase fuel prices? I don’t think so. We adopt policies that protect the nation from foreign exchange reserves deficit and to strengthen our currency. I hope all stakeholders can support the government’s policies to protect Indonesians,” Agung added.