Hausmann, Ricardo and Roberto Rigobon, (2003), “An Alternative Interpretation of the “Resource Curse”: Theory and Policy Implications”, Fiscal Policy Formulation and Implementation in Oil-Producing Countries, International Monetary Fund, Chapter 2, p.13.
McPherson, Charles, (2003), “National Oil Companies: Evolution, Issues, Outlook”, Fiscal Policy Formulation and Implementation in Oil-Producing Countries, International Monetary Fund, Chapter 7, p. 184
Prepared by Nita Thacker and Yougesh Khatri (both APD). The chapter draws on research done by Daniel Chirpich during a 2004 summer internship at the IMF’s Jakarta office.
Indonesia’s proven oil and gas reserves account for a relatively small share of the world’s total reserves (0.4 percent and 1.5 percent, respectively), while oil and gas production represent 1.5 percent and 2.8 percent of world production, respectively.
As a result of decentralization, a large share of oil revenues are now transferred to local governments.
In 2004, pump prices for gasoline in Indonesia were US$0.27 per liter, compared to US$0.89 in Singapore, US$0.87 in India, and US$1.54 Hong Kong SAR (GTZ survey, 2004). Even after the March 2005 fuel price hikes (averaging 29 percent across products), pump prices remain among the lowest in the world, reflecting still high levels of subsidization of fuel consumption by the government.
Chapter V of IMF Country Report No. 04/189 provides a fuller description http://www.imf.org/external/pubs/cat/longres.cfm?sk=17502.0.
Major new production potential include: the Cepu field which could boost oil production by up to 15 percent of current oil production not to mention its substantial gas reserves and the Tangguh project (comprising on-shore and off-shore blocs in Irian Jaya) which is reported to have around 14 TCF of gas and initial production capacity of 7 million tons/year.
Under a recently issued ministerial regulation (08/2005), contractors can claim a refund of 20 percent of operating costs incurred in the establishment of a viable producing marginal oil field, subject to annual review and a cumulative rate of return ceiling of 30 percent, at which point the incentive would cease.