INDONESIA: GROWING STRAINS IN THE OIL SECTOR

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• Collection: General CIA Records
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• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 15
• Document Creation Date: December 22, 2016
• Document Release Date: February 14, 2011
• Sequence Number: 2
• Publication Date: March 1, 1983
• Content Type: REPORT

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/ intelligence
k6, /611
Indonesia: Growing Strains
in the Oil Sector
EA 83-10055
March 1983
Copy 314
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 Directorate of Secret
Intelligence
in the Oil Sector
Indonesia: Growing Strains
Southeast Asia Division, OEA, on 351-5208.
This assessment was prepared b
Office of East Asian Analysis. Comments and queries
are welcome and may be directed to the Chief,
Intelligence Council
This paper was coordinated with the National
Secret
EA 83-10055
March 1983
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Secret
Indonesia: Growing Strains
in the Oil Sector
Key Judgments The current buyers' market for oil is creating the most serious problems for
Information available Indonesia's oil industry since the near-bankruptcy of Pertamina, the state
as of 15 March 1983 oil company, in 1975. Output slipped to 1 million barrels per day (b/d) in
was used in this report.
February-600,000 b/d below capacity-and Indonesia's leaders must
now adjust to lower oil prices. Jakarta is compounding the industry's
hardline attitude in contract disputes with several US companies. I I 25X1
difficulties by pushing for increased nationalization and adopting a
If the March 1983 OPEC agreement on prices and production quotas
holds, we project Indonesia's current account deficit will reach $10-11
billion, compared to $7.4 billion in 1982, unless there is a surge in nonoil
exports or Jakarta acts quickly to cut imports. The Indonesians have
already drawn down official foreign exchange reserves to less than $4
billion and have moved swiftly to increase foreign borrowing in early 1983.
Fearing a tightening of commercial lending later this year, the Indonesians
are arranging a $1 billion commercial credit, but they will have to pay con-
siderably higher interest rates than they would accept as recently as a few
months ago.
Although US-Indonesian relations have improved over the past few years,
falling oil revenues could lead to new friction with Washington. The
Indonesians will need increased foreign aid and loans to deal with financial
strains and are likely to focus some resentment against Washington if US
support, either bilaterally or in the international financial institutions, falls
short of their expectations.
The soft oil market already is slowing exploration in Indonesia, and we
believe Jakarta risks discouraging drilling-and its long-term oil produc-
tion prospects-even more if it pushes foreign oil companies too hard for
better terms. 25X1
Secret
EA 83-10055
March 1983
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Indonesia: Major Oil and Gas Fields
in 14
JAKARA
South
Viet M China P hi I Pik
Sea 1,
Krisna
Ariuna
Java
Oilfield
J Gasfield
Makassar
Strait
" Timor
Gulf
of
Thailand
Malaysia
aor, eo
Kalimantan
Badak
Philippine
Sea
North
Pacific
Ocean
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Indonesia: Growing Strains
in the Oil Sector
External Strains
Price and Production Pressures. Indonesia took a
tough stand on oil prices last year despite customer
demands for discounts stimulated by the weak global
oil market. President Soeharto refused to break ranks
with OPEC and rejected demands from Japanese
firms to match discounts offered by other OPEC
members (particularly Iran) and non-OPEC produc-
ers. Although oil company representatives told US
Embassy officials in mid-1982 that price cuts of $2.50
to $4 per barrel would be necessary to make Indone-
sian crudes competitive, Jakarta kept its prices firm
until November. It then offered only modest reduc-
tions ranging from 47 cents to $1.90 per barrel, which
still kept Indonesian prices within OPEC guidelines
on differentials.
Since late 1981 Indonesia has been unable to sell all
the crude oil it could produce, given its tough stand on
prices. Buyers in Japan and the United States, which
together absorb over 80 percent of Indonesia's oil
exports, cut their combined purchases of Indonesian
crude by 10 percent in 1981 and another 20 percent in
1982. After averaging 1.6 million b/d in 1981, oil
output began slipping late in the year and continued
to fall in early 1982. Jakarta then agreed to limit
output to 1.3 million b/d in April 1982 in line with
OPEC production quotas. Even so, Indonesia's output
fluctuated 20,000 to 40,000 b/d below the quota in
some months because the country could not sell all of
its reduced allotment. Following OPEC's failure to
agree on prices and output quotas at the Vienna
meeting in December 1982, Indonesia's crude oil
output slipped to 1.1 million b/d in January 1983 and
billion and helped push the current account deficit to
$7.4 billion, President Soeharto continued to stress
economic development in his speeches and in cabinet
meetings. Through most of the year, he showed little
recognition of the need for budget austerity as the oil
glut persisted, and, according to Embassy reporting,
the technocrats were reluctant to press for a slowdown
in development spending'. A former Finance Minister
and mentor of the technocrats, Professor Sumitro
Djojohadikusumo, was the first to call publicly for a
slowdown. Soeharto rejected this advice in his Inde-
pendence Eve speech on 16 August and repeated the
development theme in a major address to the nation
on 1 October. By then, however, the technocrats had
begun in press interviews to prepare the government
and the public for the stiffer austerity measures that
would be necessary in 1983 as a result of the pro-
longed slump in oil and nonoil exports.
The Tougher Domestic Operating Environment
At about the same time as the onset of the world oil
glut, foreign oil companies in Indonesia found the
local operating environment toughening under the
leadership of Pertamina's new President, Judo Sum-
bono. Since he was appointed in May 1981, Sumbono
has taken a much more confrontational approach than
his predecessor toward the foreign oil companies,
which account for over 90 percent of Indonesia's
crude oil output. In the past two years, disputes have
arisen over the commercial prospects of new fields and
other contract terms, as well as over the pace of
training Indonesians to run the industry.
to 1 million b/d in February 1983.
Slow Response to Falling Revenues. Jakarta was slow
to respond to the deterioration in its export per-
formance in 1982 because of a belief that the world oil
glut would be temporary, according to US Embassy
reports. Although the soft oil market reduced Indone-
sia's foreign exchange earnings from oil by $4.2
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 Pertamina refused to renew one of Atlantic Rich-
field's contracts and ordered the company to halt
production at the Sembakung field in East Kaliman-
tan. The field, which was producing almost 10,000
b/d at the time, had not yet produced enough crude
oil to enable Arco to recover its costs.
As president-director of Pertamina, Brig. Gen. Judo Sumbono
plays a major role in the formulation of overall Indonesian energy
policy and in the selection of suppliers and contractors for
important petroleum projects. According to US Embassy officials
in Jakarta, Sumbono's complete loyalty and closeness to both
President and Mrs. Soeharto were key elements in his selection for
his current position. Nonetheless, he had developed a reputation as
a good organizer and administrator in Pertamina's domestic
supply operation during his 20-year career in the oil industry.
Sumbono, 53, has never held a military command, and, according
to US Embassy officials, many Indonesian military officers believe
Contracts and Commerciality. Under Sumbono,
Pertamina has hardened its requirements for permit-
ting oil companies to start commercial production of
new fields. Pertamina is requiring that new fields
contain sufficient recoverable reserves to assure that
the government will obtain at least 51 percent of the
recoverable oil. These estimates will be based on
Pertamina's own calculations, rather than the reserve
estimates made by oil company geologists as previous-
ly accepted. On several occasions since mid-1981,
Pertamina has refused to declare new fields commer-
cial, thus preventing the companies from beginning
production and recovering their exploration costs. The
issue first gained prominence in August 1981, when
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In this case, Pertamina geologists estimated that
reserves in the field amounted to only 26 million
barrels, compared with Arco's figure of 40 million
barrels. Jakarta argued that reserves were insufficient
to supply the government with at least 51 percent of
the recoverable oil. After a year of negotiations, an oil
industry trade journal reported in August 1982 that
the two parties had reached an agreement permitting
Arco to continue producing oil from the field until its
costs have been recovered. Arco will then relinquish
the acreage to Pertamina, which will have to decide
whether further production would be profitable. If so,
Pertamina will undertake production itself.
Because Indonesia has numerous small fields,
Pertamina officials have told news reporters they
expect similar disputes to occur. Indeed, Mining
Minister Subroto publicly cited the Salawati field in
Irian Jaya operated by Phillips Petroleum as one that
would not meet the current test for commerciality.
Output in this field reached 47,000 b/d in 1977, its
first year of production, but by 1982 had fallen below
4,000 b/d because of water encroachment into the
reservoir-a level Subroto said is too low to produce
income beyond the coippany's cost recovery. Phillips
has complained in industry forums that Pertamina is
demanding that it relinquish acreage faster than
required by the terms of its production-sharing con-
tract.
Indonesianization. Despite the soft world oil market,
Jakarta is continuing to push nationalist policies that
would increase Indonesian participation in the oil
industry. During recent boom years, the oil companies
criticized Jakarta's policies but took measures to
avoid slowing their operations. In 1980, for example,
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when Pertamina ordered foreign oil companies to hire
only local Indonesian subcontractors for services and
supplies, oil company officials grumbled, but then
took into account the expected delays and inefficiency
by advancing their planning schedules and raising
cost estimates
In its latest Indonesianization move, Jakarta ordered
foreign oil companies in November 1982 to replace
expatriates with native Indonesians in certain skilled
drilling rig jobs by 1 January 1983-an action that
could have affected 3,000 foreign workers, according
to press reports. Oil company spokesmen have com-
plained publicly that their operations would be hurt
because there are not enough trained Indonesians.
Although Jakarta has refused to back down from its
ultimate goal and is giving preference in approving
drilling permits to firms that comply with its regula-
tions, enforcement of the order has been less rigid
than originally expected, and Jakarta is continuing to
approve work hermits for essential expatriates. Fur-
thermore,
companies have retained expatriates as "consultants
to oversee operations until their Indonesian employees
are fully capable of assuming new responsibilities.
The Caltex Negotiations. Jakarta is aiming to boost
its return from Caltex, which normally accounts for
about half of national output, without damaging the
exploration climate for other oil companies. Perta-
mina and Caltex have been negotiating for more than
a year on the terms of a new production-sharing
agreement to replace an older concession-type Con-
tract of Work that expires in November 1983.1 The
Indonesians hope Caltex's new agreement will not
Oil Companies' Sensitivity to Contract Changes
Once before, changes in contract terms played a
major role in discouraging exploration activity. Fol-
lowing the near bankruptcy of Pertamina, oil compa-
nies sharply cut back exploration drilling during
1975-77, when Jakarta sought to boost its income
from oil production by unilaterally increasing its
share of output under all production-sharing con-
tracts from 65 percent to 85 percent. The result was a
three-year drop in output from the 1977 peak. Explo-
ration drilling began to recover in 1978, when rising
world oil prices and improvements in Indonesia's
cost-recovery provisions and depreciation allowances
restored the country's attractiveness to foreign oil
companies, but output did not increase until 1981.
discourage other companies, all of which have been
operating under production-sharing contracts since
the late 1960s, from maintaining active exploration
and production programs. Since no other company
produces 150,000 b/d, according to Pertamina statis-
tics, the Indonesians have proposed a three-tiered
formula that would give the government the same 85-
percent share currently in effect for all production-
sharing contracts out of the first 150,000 b/d of
Caltex's output. The government's share would rise to
90 percent for the next 100,000 b/d, and to 95 percent
for output in excess of 250,000 b/d. If Caltex agrees,
this formula would give Pertamina over 90 percent of
its production versus the 85-percent share in effect
with all other production-sharing companies.
Although Caltex officials are balking at the 95: 5-
percent part of the formula, we believe the two parties
will reach a compromise escalation formula prior to
the November expiration date to avoid jeopardizing
production. There is a real risk, however, that they
will fail to reach agreement before it is too late to
avoid a temporary shutdown of Caltex's production.
2 Under production-sharing contracts, Pertamina gains an equity
share of the crude oil output produced by its contractors. Pertamina
has decisionmaking authority over all oil company decisions and
obtains title to all equipment installed by the oil companies when
they bring new equipment into the country. Production-sharing
contracts also include signature bonuses and mandatory relinquish-
ments of specified shares of contract acreage according to preset
timetables. Under the older Contracts of Work, the oil companies
obtained concessions and essentially made all the field development
and production decisions independently of Jakarta. In addition, the
companies paid a portion of their profits to Jakarta-a much more
complicated arrangement that gave rise to Indonesian suspicions of
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Table I
Indonesia: Production-Sharing Contracts, 1982
Area
(square
kilometers)
Exploration
Commitment
Signature
Bonus
(million
Million
US$
Years
US $J
Onshore Tarakan
E. Kalimantan
Onshore Ritan
C. Kalimantan
Onshore Maruwai
C. Kalimantan
Offshore Cilacap
S. Java
11 February
Louisiana Land (Getty Oil/
Pelabuhan Ratu/LL & E)
Offshore Pelabuhan Ratu
S. W. Java
9,275
34.0
6
1.0
11 February
Mobil
Onshore Semayang
E. Kalimantan
18,460
149.0
115.0
Onshore Adang
E. Kalimantan
9 June
INPEX
Offshore N. Aceh
29,905
88.0
11.0
9 June
Amoco
Offshore Lombok
26,640
68.6
6
1.0
20 October
Hudbay Oil (Pennzoil Asiatic/
Husky Oil)
Onshore and offshore Madura
Strait
13,970
47.85
6
1.5
20 October
Sceptre Resources, Ltd.
Offshore Java Block A
50.0
6
20 October
Sceptre Resources, Ltd.
Offshore Java Block B
18,315
47.0
6
1.1
20 October
Promet
Offshore S. W. Arafura Block,
Irian Jaya
18,315
55.0
6
2.75
Press reports indicate that other oil companies are
monitoring the negotiations carefully to determine
whether Pertamina might use the Caltex negotiations
as a precedent to change the terms of their contracts.
The record number (13) of new production-sharing
agreements signed during 1982 suggests that so far
Jakarta has been successful in persuading other oil
companies that negotiations with Caltex do not pre-
sage changes in. their contracts. This situation oc-
curred in 1976 when Pertamina unilaterally increased
its share of all production-sharing agreements from 65
percent to 85 percent.
The 1983 Financial Squeeze
Indonesia and the World Oil Market. Current condi-
tions in the world oil market promise a further decline
in Indonesia's oil export earnings this year. There are
no signs yet that the decline in oil consumption has
bottomed out, and there is little hope that it will until
a sustained economic recovery gets under way in the
developed countries. According to press reports, the
latest OPEC agreement to reduce the benchmark
price by $5 per barrel calls for Indonesia's production
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Figure 1
Indonesia: Crude Oil Output and Exports
Output
%
I I I I I I I I I I
0 1974 75 76 77 78 79 80 81 82 83a
aFor 1983, the median line represents. continuation of 1982 production and
export levels. The upper limit represents a 100,000-b/d increase in output
and exports. The lower limit shows a 100,000-b/d decline. The current world
oil market suggests output and exports for the year are likely to fall in the
lower half of the range.
quota to remain at 1.3 million b/d-some 300,000
b/d below capacity, but 200,000 b/d above early 1983
production levels. According to our projections:
? If the new agreement holds, Indonesia's oil and gas
export revenues will fall by nearly $2 billion to
$10.8 billion this year.
? If the agreement does not hold, each $1 per barrel
drop in price will reduce oil export revenues by $320
million annually and LNG export earnings by about
$70 million (see appendix)
Current Account Deteriorating. Without a dramatic
improvement in export performance or a drastic shift
in import policy, we now estimate the current account
deficit in 1983 will fall in the $10-11 billion range and
could be even higher if oil prices spiral downward. As
it is, exports of wood, rubber, tin, palm oil, coffee, and
other traditional agricultural and mineral products
have not yet recovered, and earnings from these
sources appear likely to lag the economic recovery of
major markets in Japan, the United States, and
I I I I I I
3 1974 75 76 77 78 79 80 81 82 83a
a For 1983, the upper limit represents a 100,000-b/d increase in exports to
975,000-b/d at OPEC's new benchmark price of $29 per barrel, producing
revenues of $10.3 billion annually. The median line, based on Indonesia's
1.3-million-b/d production quota, reflects a continuation of 875,000-b/d
exports at $29 per barrel. The lower line represents 875,000-b/d at $25 per
barrel, producing oil export revenues of $8 billion. Current world oil market
conditions suggest earnings will fall in the lower part of the range.
Western Europe. We believe a downward spiral in oil
prices would produce unmanageable projected deficits
that would force the government to adopt stern
measures to cut imports.
Jakarta is already increasing its foreign borrowing to
help finance this year's deficit because, in our judg-
ment, it would prefer to avoid a further sharp reduc-
tion in monetary reserves. The government financed
the 1982 deficit through a combination of drawing
down reserves and borrowing abroad. By the end of
1982, Jakarta had drawn down official foreign ex-
change reserves by nearly $3.5 billion to less than
$4 billion.
Jakarta also has access to another $4 billion in net
foreign assets accumulated by the state banks over the
past few years. In addition, press reports disclose that
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Table 2
Indonesia: Current Account Scenarios, 1983 a
Price Per Barrel
Crude Oil Exports (1,000 b/d)
1,100
1,000
875 b
775
33.60 b
-6.2
-7.4
-9.0
-10.2
30.00c
-7.4
-8.5
-10.0
-11.1
27.00 c
-9.0
-10.0
-11.3
-12.3
25.00 c
-10.0
-11.0
-12.1
-13.1
20.00 c
-12.5
-13.3
-14.2
-15.0
a Projections assume: (1) 5-percent real growth in imports in 1983.
Each 1-percent reduction in imports would cut the current account
deficit by $200 million; (2) nonoil exports are assumed to grow at 5
percent with no adjustment made for faster world economic growth
caused by lower oil prices.
b Indonesia's average price and volume for 1982.
c OPEC average prices.
Central Bank officials are arranging a $1 billion loan,
which would be the second-largest commercial credit
ever obtained by an Asian borrower, and they expect
to borrow more later this year. Jakarta has moved
quickly out of concern that commercial bank loans
will become more restrictive later this year and is
willing to pay a considerably higher interest rate than
it would accept as recently as late 1982. As long as
Indonesia is willing to pay higher rates, commercial
bankers in early 1983 appeared inclined to continue
providing credits, according to financial press reports.
Nonetheless, in the absence of an export recovery or
stiffer austerity measures, we believe bankers will
become more reluctant to lend to Indonesia.
Jakarta has also displayed increasing nervousness over
With declining oil earnings
in view, we believe Jakarta will have to cut develop-
ment spending and live more austerely without exces-
sive borrowing to avoid a severe financial squeeze
within the next few years.
Political Fallout. We believe shortfalls in oil earnings
will intensify political infighting within the Indone-
sian bureaucracy as ministers who have become ac-
customed to growing expenditures find their resources
squeezed. With development spending budgeted to
rise only 7.9 percent and routine spending only 3.9
percent in the fiscal year beginning April 1983, even
the excessively optimistic budget projections pub-
lished by the government indicate a spending decline
in real terms. Some hint of the conflicting pressures
was revealed in an Embassy report of a cabinet
meeting attended by World Bank President Clausen
during his visit to Jakarta last November. At the
meeting, Finance Minister Wardhana reported on the
magnitude of the drop in export earnings and conclud-
ed with an eloquent call for restraint by ministers in
their budget proposals for FY 1983/84. Minister of
Research and Technology Habibie, however, followed
Wardhana's presentation with a similarly eloquent
speech stressing the need for continued spending on
development with little apparent regard for resource
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US-Indonesian Relations:
Potential for a Downturn
Although US-Indonesian relations have improved
considerably since 1980 when disputes over rice sales,
notification of US naval vessels transiting Indonesian
waters, and declining US military aid angered the
Soeharto government, the continuing sharp decline in
oil revenues is creating an atmosphere that could
produce another downturn in bilateral relations. We
believe that financial difficulties over the past year
have led the Indonesians to complain more forcefully
about US policies on tin sales, coffee export quotas,
and limitations on textile imports.
The March 1983 OPEC agreement on prices and
production virtually assures a continuing decline in
Indonesia's oil revenues this year. If the agreement
collapses, Jakarta's financial situation will become
even more precarious, forcing more stringent auster-
ity measures than those already in place. Besides
retrenching spending, Jakarta will need to turn in-
creasingly to foreign lenders and aid donors, includ-
ing the International Monetary Fund and other inter-
national institutions. In our judgment, Jakarta would
almost certainly seek a more forthcoming US atti-
tude toward economic and military aid, greater sup-
port for loans from the IMF, and a more generous
approach in general to Third World interests-areas
where the Indonesians could very well be disappoint-
ed. We also might expect the Indonesians to be
extremely sensitive to any hint that multinational
firms or developed countries, particularly the United
States, are benefiting from Indonesia's financial
hardships. Any resentment against foreign investors
or lenders could create difficulties for American
firms operating in Indonesia as Jakarta seeks to
increase its revenues at their expense.
Sumbono's Vulnerability. The continuing weakness in
oil earnings almost certainly will cause Judo Sumbono
some political problems.
We
believe his opponents will try to retaliate if an oppor-
tunity arises. In our judgment, Pertamina's current
revenue shortfalls will impair Sumbono's ability to
satisfy all the demands for unofficial funds and could
make him vulnerable to the same charges of nonco-
operation that apparently led to his predecessor's
prices might weaken his standing with Soeharto.
The Long-Term Threat. Although financing is the
most serious immediate challenge, a longer term
danger is reduced exploration for oil. We believe
Indonesia will find it difficult this year to maintain
the exploration boom of the past few years even
though foreign oil companies signed 13 new produc-
tion-sharing contracts in 1982, compared with nine in
1981. Exploration spending budgets in 1981 and 1982
topped $1 billion annually, but actual spending in
1982 almost certainly dropped by at least 20 percent
as the number of exploration wells drilled-which had
risen steadily from 154 in 1978 to 244 in 1981-
dropped sharply. According to the US Embassy,
production-sharing companies drilled only 149 explo-
ration wells through October 1982 out of 266 project-
ed for the year and slowed seismic survey activity.
Companies also cut back on signature bonuses they
were willing to pay to explore. None of the new
contracts signed in 1982 included bonuses even re-
motely approaching the $40 million paid by one US
firm in 1980 or the record $71 million paid by Caltex
in 1981 for an offshore North Sumatra block.
We believe Jakarta's efforts to spur exploration will
be weakened by the government's plans to transfer all
onshore drilling operations to Indonesian firms within
the next two years and to press ahead with Indone-
sianization in oil company employment practices. In
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addition, lower oil company profit margins suggest
that companies are likely to take a much more
cautious approach to new spending commitments in
Indonesia. For example, oil company representatives
have told US Embassy officials that they are interest-
ed in several of the new blocks Jakarta is offering for
exploration, but that cash flow problems of their
parent companies are forcing slowdowns in their
Indonesian operations and elimination of marginal
projects.
A slowdown in oil exploration would have serious
consequences for Indonesia's oil production capacity
later in the 1980s, in our judgment. Most of Indone-
sia's oil deposits occur in small reservoirs that are
quickly depleted, and active exploration programs are
necessary to maintain the country's production capac-
ity. The exploration slowdown that occurred during
1975 to 1977, for example, resulted in declining
output from 1977 until the 1978 exploration boom
finally reversed the downward trend in 1981.
Pertamina does not yet have
enough sufficiently skilled oilfield workers to make up
for the slack in exploration by the foreign oil compa-
nies.
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Appendix
Relations With OPEC
During OPEC deliberations on price and production
quotas in 1982 and early this year, Indonesia contin-
ued to follow the lead of Saudi Arabia and Kuwait on
prices while seeking to gain a compromise on pricing
and production among OPEC's various factions. US
Embass reporting indicate Indonesia
had accepted the Marc 982 production quotas as
the only effective means of maintaining the cartel's
pricing power. Even though US Embassy reporting
disclosed increasing Indonesian dissatisfaction with its
1.3-million-b/d quota as the year progressed, Jakarta
did not cut prices to boost production above its quota.
Indonesia went into the OPEC meeting in Vienna in
December 1982 hoping to obtain a 200,000-b/d in-
crease in its production quota. Although the meeting
collapsed without agreement on new production quo-
tas or price differentials, Mining Minister Subroto
told one press reporter that Indonesia's output would
be held at 1.3 million b/d.
In subsequent conversations with US
Embassy officers in Jakarta, Indonesian officials un-
characteristically blamed Saudi Oil Minister Yamani
for deliberately causing the collapse of the Geneva
meeting in January.
In our judgment, Jakarta remains committed to a
compromise on output quotas within OPEC, although
the Indonesians believe they are entitled to a larger
quota. We believe the Indonesians fear a downward
price spiral, which would cause an even sharper
reduction in their revenues and which they are ner-
vously hoping the March 1983 OPEC agreement can
avoid. In our view, they will press their OPEC
partners to avoid excessive cheating that could lead to
a price war. According to the government's budget,
the Indonesians have based their revenue projections
for the fiscal year beginning in April 1983 on a $34
benchmark price and output of 1.4 million b/d. They
are counting on Saudi financial assistance to make up
for any shortfall from either of these projections to
avoid even tighter government spending than the
austere budget already proposed.
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