Indonesia should downgrade OPEC status: Panel<\/p>\n
Dow Jones, Jakarta<\/p>\n
A high-level Indonesian panel has recommended that the country
\ndowngrade its membership in the Organization of Petroleum
\nExporting Countries (OPEC) to \"observer\" status, an official
\ndocument recently viewed by Dow Jones Newswires indicated.<\/p>\n
A downgrade would reduce the financial commitments of
\nIndonesia, already a net importer of oil, to the group, according
\nto the document.<\/p>\n
The document doesn't say if such a downgrade would affect
\nIndonesia's right to vote during OPEC meetings on the group's
\noutput policy. However, the document does indicate Indonesia's
\npowers within OPEC would be curtailed.<\/p>\n
It is unclear if OPEC would permit such a downgrade, which
\nwould be unprecedented in the group's history.<\/p>\n
According to the document, the panel, which includes high-
\nlevel officials from the Ministry of Energy and Mineral
\nResources, Finance Ministry and Ministry of Foreign Affairs, is
\nrecommending the OPEC membership status change on economic
\ngrounds.<\/p>\n
Such a downgrade would exempt Indonesia's cash-strapped
\ngovernment from OPEC's annual membership fee of $1 million and a
\nyearly contribution of US$52,016 to the OPEC Fund, the document
\nsaid.<\/p>\n
Government officials contacted by Dow Jones Newswires declined
\nto comment on the document, merely saying the government is still
\ndiscussing the matter.<\/p>\n
On Indonesia's membership in OPEC, which the country joined in
\n1962, the panel has considered three options, the document said.<\/p>\n
Indonesia could maintain its current status until it is
\nofficially declared a net oil importer and disqualified as an
\nOPEC member by the group.<\/p>\n
It could also withdraw from OPEC or downgrade its membership
\nto \"observer\" status.<\/p>\n
\"Taking into account (the costs and benefits), it's
\nrecommended - if possible - to take the third option, which is to
\ncontinue as a member, but with 'observer' status, so that
\n(Indonesia) is exempt from the obligation to pay contributions,\"
\naccording to the document.<\/p>\n
The panel's conclusion is the result of a directive issued by
\nMines and Energy Minister Purnomo Yusgiantoro earlier this year,
\nwho had called for an official review of Indonesia's OPEC
\nmembership, amid pressure from legislators and industry analysts.<\/p>\n
That pressure has stemmed from Indonesia's steadily
\ndiminishing crude oil output due to a lack of fresh investment
\nand exploration as established oil fields run dry.<\/p>\n
Foreign investors have steered clear of pumping new money into
\nIndonesia's energy sector due to infrastructure concerns and
\nperceptions of an unpredictable judiciary.<\/p>\n
For the first time ever, Indonesia became a net crude oil
\nimporter for several months last year as a lack of new oil
\nexploration over the past three to five years sent oil production
\ntumbling.<\/p>\n
Indonesia's imports of petroleum products have exceeded
\nexports for several years and the country has been struggling to
\nmeet its current OPEC output quota of around 1.4 million barrels
\na day.<\/p>\n
The country produced 961,200 b\/d of crude oil in March,
\noutpacing the 942,000 b\/d in February, a level that analysts say
\nhad marked a 30-year nadir.<\/p>\n
The panel also says a downgrade to \"observer\" status would
\nhelp Indonesia maintain good ties with other OPEC members which
\ncould be extended to wider economic cooperation beyond oil,
\naccording to the document.<\/p>\n
Continued OPEC membership, albeit in a diminished form, would
\nalso benefit Indonesia in terms of bilateral or multilateral
\nsupport from OPEC countries during times of heightened political
\ntensions at home.<\/p>\n
The separatist insurgency in the northwestern province of Aceh
\nhasn't waned; neither have the ethnic and religious conflicts in
\nMaluku and Central Sulawesi.<\/p>\n
Continued Indonesian membership would also help preserve OPEC
\nunity.<\/p>\n
\"Even with such (a reduced Indonesian) status, OPEC unity
\nhopefully can still be preserved, so that negative implications
\nfor oil prices can be minimized,\" the document cited the panel as
\nsaying.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-should-downgrade-opec-status-panel-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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