Indonesia to pull out of OPEC: minister

Indonesia will withdraw from the Organisation of Petroleum Exporting Countries after years of declining exports, the energy minister said Wednesday even as other producers cash in on soaring oil prices.

• The only Southeast Asian member of the cartel has become a net oil importer and will not bother to renew its OPEC membership at the end of this year, Energy and Mineral Resources Minister Purnomo Yusgiantoro said.
• “When I get back to the office … I will sign that we withdraw from OPEC,” Yusgiantoro told a group of foreign reporters at a lunch in Jakarta.
• He said Indonesian President Susilo Bambang Yudhoyono had told a recent budget planning meeting that he had decided to pull the country out of the group, which accounts for 40 percent of the world’s oil supplies.
• But the minister said Indonesia, one of the smallest OPEC members, could rejoin if production increased in line with an ongoing effort to boost capacity after years of declining investment.
• “If our production comes back again to a level that gives us the status of a net oil exporter then I think we can go back to OPEC,” he said.
• Indonesia’s membership of OPEC will expire at the end of 2008 when its current paid membership of the organisation runs out, Yusgiantoro said.
• “We already paid the fee this year … the fee is about two million euros (3.14 million dollars),” he said.
• Indonesian officials have for years been weighing up the benefits of pulling out of OPEC, with the cabinet discussing a withdrawal earlier this month.
• While other OPEC members have enjoyed windfall profits on the back of high global oil prices, Indonesia has been unable to get enough of its 4.37 billion barrels in proven reserves to the market.
• As a net oil importer, Indonesia would benefit from lower prices, whereas OPEC has been criticised for failing to boost supply to cut the cost of crude, which hit an all-time high above 135 dollars per barrel last week.
• The cost of sustaining massive fuel subsidies in the face of record oil prices forced the Indonesian government last week to hike the retail fuel price by some 30 percent.
• The move has sparked widespread protests and piled pressure on the government ahead of elections next year.
• Oil production in the archipelago has been in decline since 1995 with yields dropping in well-established fields, Yusgiantoro said.
• Indonesia’s current oil production of close to a million barrels a day is just under the OPEC ceiling for the country, but the government says new wells could boost capacity beyond the ceiling in the next three years.
• The government earlier this year lowered its oil sales estimate for 2008 to 927,000 barrels a day from a previous 1.034 million barrels.