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ouse of Representatives Commission VII overseeing energy accepted on Wednesday the government'€™s proposal to lower the oil-output target in the revised 2015 state budget as weak oil prices in the world market may cause a delay in new oil projects.

After around four hours of deliberation, all factions from 10 political parties in Commission VII agreed on an oil-output assumption in the revised state budget of 825,000 barrels of oil equivalent per day (bopd), lower than the previous budget of 849,000 bopd.

'€œThe target is set at 825,000 bopd as the government has suggested. However, we are expecting that the realization of the target will be historically higher,'€ Commission VII head Kardaya Warnika said.

The government initially proposed maintaining the target of 849,000 bopd, a calculation from oil and gas contractors'€™ work plan and budget proposed in December. But the decline in oil prices has affected new oil projects. The Upstream Oil and Gas Special Regulatory Task Force (SKKMigas) said a number of contractors were planning to delay projects due to the decline in oil prices.

'€œWe estimate the output range will be at 810,000 to 825,000 bopd. Contractors are still reviewing their projects as there is no certainty about when the price will recover,'€ SKKMigas chief Amien Sunaryadi said.

The benchmark Brent price was traded at US$49.14 per barrel on Wednesday, according to figures from Bloomberg. Oil prices have been under pressure following a global supply glut due to rising production of US shale gas. The price of oil was as high as $115 in June last year.

Indonesia, a former member of the Organization of Petroleum Exporting Countries (OPEC), has seen failures in meeting oil-output targets in previous years because its oil fields have been depleted due to exploitation in the past, while explorations to find new hydrocarbons are low. Oil lifting was at 793,570 bopd in 2014, lower than a target of 818,000 bopd.

Higher production from Banyu Urip field at Cepu block is expected to be a big contributor to this year'€™s oil output. The field is currently producing at around 40,000 bopd from its early production facility (EPF) and its early oil expansion. Banyu Urip, the operator of which is ExxonMobil, is under development, and is expected to be completed in the third quarter of the year and reach a peak production of 165,000 bopd in the fourth quarter of the year.

Other than the technical issue of declining oil prices, business certainty in the country will also affect contractors'€™ appetite for working on projects.

'€œThe bioremediation case experienced by Chevron has yet to be settled and has had a bad impact on the industry. If the situation gets worse, it is not impossible that Chevron will reduce its contribution,'€ Energy and Mineral Resources Minister Sudirman Said told legislators.

The lower oil output will directly affect the calculation of state income from the oil and gas sector this year. Under a previous calculation with an 849,000 bopd oil-output assumption and 1,177 million barrels of oil equivalent per day (mboedp) with an oil-price assumption of $70 per barrel, the country is expecting $14.9 billion in state income from the sector.

On Wednesday evening, Commission VII and the Energy and Mineral Resources Ministry was still working on the gas-output calculation and the oil-price assumption, particularly whether it would be maintained at 1,177 mboed and $70 per barrel or would also be lowered.

The new calculation of the state income has yet to be announced as it is pending deliberation at the House'€™s budgetary commission. However, Commission VII head Kardaya Warnika stated that the assumption of 825,000 bopd would have to be maintained and could not be changed at the budgetary commission of the House without approval from Commission VII.