Business | Oil & Gas
Indonesia wants to leave Opec citing output decline
Indonesia's old quota for Opec was 1.399 million bpd but Opec members targets were changed in September to reflect actual production and Indonesia's target stands at 865,000 bpd.
- Reuters
- Published: 00:35 May 7, 2008
Jakarta: Indonesia said on Tuesday it may quit Opec, citing a decline in crude oil output that has reduced its influence in the group.
Indonesia is Asia-Pacific's only member of Opec, but its crude oil output has fallen in recent years due to ageing wells, a lack of investment, and the absence of any major oil finds.
Its status as a net importer means it would benefit from lower oil prices, putting it at odds with other Opec members, who favour higher prices.
"We are studying whether we have to stay in Opec or leave. We are now a crude oil importer and our production has declined to below one million barrels," Indonesia's President Susilo Bambang Yudhoyono said, referring to the country's daily output.
Indonesia produced 977,000 barrels per day (bpd) of oil and condensate in April, an official at the country's energy watchdog said last week. Of this, 859,000 bpd were crude and 118,000 bpd were condensate.
Indonesia's status as a net oil importer has prompted many analysts to question its continued membership of Opec, especially at a time when the group has been expanding.
Angola, Africa's second largest producer, joined more than a year ago and will add up to two million bpd to the organisation by 2009, while Ecuador added some 510,000 bpd when it rejoined Opec last November as the group's smallest producer.
Kurtubi, an energy analyst at the Centre for Petro-leum and Energy Economics Studies in Jakarta, said Indonesia should already have left the group because of its status as a net oil importer, which is different from Opec's interests.
"Our interests now are different. As an importer, we want oil prices to come down as high oil prices put pressure on our budget. But exporters want a reasonable or even high price since it is their main source of revenue," Kurtubi said.
Indonesia's old quota for Opec was 1.399 million bpd but Opec members targets were changed in September to reflect actual production and Indonesia's target stands at 865,000 bpd.
Despite its vast natural resources, the government is facing tough decisions over its energy and economic policies due to the surge in the global price of oil.
Fuel is heavily subsidised in a country where millions of people live on less than two dollars a day. But with oil trading around a record $120 per barrel, fuel and energy subsidies were forecast to cost the state as much as $20 billion this year, pushing up the budget deficit.
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