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Indonesia to pull out of Opec
Indonesia on Wednesday said it would withdraw from 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 cartels only Asian member would like world oil prices to fall while Opecs 12 other members would like prices to remain high. Analysts said the decision would have little effect on either Indonesia or Opec since Indonesias production, of about 1m barrels a day, was only 3.1 per cent of the groups 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. Indonesias oil production peaked in 1976 and, after fluctuating for two decades, started to decline in 1995 due to aging fields and a lack of investment. It became a net oil importer in 2005. The energy ministry said production would average about 1m 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 worlds second largest liquefied natural gas exporter and second largest exporter of thermal coal, which is used mostly for power generation. Mr Purnomo said Indonesias gas and 2008 coal production was expected to be equivalent to 1.5m and 2m barrels of oil a day, respectively. Kurtubi, the director of the Centre for Petroleum and Energy Economic Studies in Jakarta, said Indonesias decision was appropriate in light of its net importer status but that it would have little impact on either the country or Opec. Its 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. Posted by: tipper 2008-05-28 |
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