Indonesia to pull out of Opec
John Aglionby in Jakarta | Friday, 30 May 2008
INDONESIA said last Wednesday it would withdraw from the Organisation of Petroleum Exporting Countries (Opec) at the end of this year because, as a net oil importer, its interests were no longer served by being a member of the oil producers' cartel.
Purnomo Yusgiantoro, energy and mineral resources minister, said Indonesia - the cartel's only Asian member - would like world oil prices to fall while Opec's 12 other members would like prices to remain high.
Analysts said the decision would have little effect on either Indonesia or Opec since Indonesia's production, of about 1.0m barrels a day, was only 3.1 per cent of the group's 31.9m b/d April output.
Mr Purnomo said Indonesia would like to quit now but since it cannot recoup its 2008 membership fees, it would remain active until its dues expire. However, he said Indonesia might follow the example of Ecuador, which left Opec in 1992 and rejoined last November.
Indonesia's oil production peaked in 1976 and, after fluctuating for two decades, started to decline in 1995 due to ageing fields and a lack of investment. It became a net oil importer in 2005. The energy ministry said production would average about 1.0m barrels a day while usage would be at least 20 per cent higher than this. Current reserves are 8.4bn barrels.
The country remains a net energy exporter due to its massive gas and coal reserves. It is the world's second largest liquefied natural gas exporter and second largest exporter of thermal coal, which is used mostly for power generation.
Mr Purnomo said Indonesia's gas and 2008 coal production was expected to be equivalent to 1.5m and 2.0m barrels of oil a day, respectively.
Kurtubi, the director of the Centre for Petroleum and Energy Economic Studies in Jakarta, said Indonesia's decision was appropriate in light of its net importer status but that it would have little impact on either the country or Opec.
"It's the right decision because Indonesia wants oil prices to fall to stop its state budget bleeding as much as it has been recently," he said. "It will also act as a warning to the industry and society that the country must do something to increase production."
Indonesia raised prices of subsidised fuels, which account for 95 per cent of consumer use, by an average of 28.7 per cent last Saturday. This cut its fuel subsidy bill by Rp35,000bn ($3.76bn), or about 20 per cent.
Mr Kurtubi said it would be at least 10 years before Indonesia recovered its net oil exporter status because the 2004 oil and gas law was less investor friendly than previous legislation. Oil companies are now taxed during the exploration phase in addition to the production period.
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Purnomo Yusgiantoro, energy and mineral resources minister, said Indonesia - the cartel's only Asian member - would like world oil prices to fall while Opec's 12 other members would like prices to remain high.
Analysts said the decision would have little effect on either Indonesia or Opec since Indonesia's production, of about 1.0m barrels a day, was only 3.1 per cent of the group's 31.9m b/d April output.
Mr Purnomo said Indonesia would like to quit now but since it cannot recoup its 2008 membership fees, it would remain active until its dues expire. However, he said Indonesia might follow the example of Ecuador, which left Opec in 1992 and rejoined last November.
Indonesia's oil production peaked in 1976 and, after fluctuating for two decades, started to decline in 1995 due to ageing fields and a lack of investment. It became a net oil importer in 2005. The energy ministry said production would average about 1.0m barrels a day while usage would be at least 20 per cent higher than this. Current reserves are 8.4bn barrels.
The country remains a net energy exporter due to its massive gas and coal reserves. It is the world's second largest liquefied natural gas exporter and second largest exporter of thermal coal, which is used mostly for power generation.
Mr Purnomo said Indonesia's gas and 2008 coal production was expected to be equivalent to 1.5m and 2.0m barrels of oil a day, respectively.
Kurtubi, the director of the Centre for Petroleum and Energy Economic Studies in Jakarta, said Indonesia's decision was appropriate in light of its net importer status but that it would have little impact on either the country or Opec.
"It's the right decision because Indonesia wants oil prices to fall to stop its state budget bleeding as much as it has been recently," he said. "It will also act as a warning to the industry and society that the country must do something to increase production."
Indonesia raised prices of subsidised fuels, which account for 95 per cent of consumer use, by an average of 28.7 per cent last Saturday. This cut its fuel subsidy bill by Rp35,000bn ($3.76bn), or about 20 per cent.
Mr Kurtubi said it would be at least 10 years before Indonesia recovered its net oil exporter status because the 2004 oil and gas law was less investor friendly than previous legislation. Oil companies are now taxed during the exploration phase in addition to the production period.
................................
Under syndication
arrangement with FE