Indonesia against immediate OPEC emergency meeting

Indonesia against immediate OPEC emergency meeting

JAKARTA (JP): Minister of Mines and Energy Susilo Bambang
Yudhoyono said on Friday that Indonesia saw no need to hold an
immediate emergency meeting of the Organization of Petroleum
Exporting Countries (OPEC) to raise crude oil production.

"Indonesia's opinion is that an emergency meeting is not
necessary," Bambang told reporters.

He was commenting on a Thursday night meeting with OPEC
Secretary-General Rilwanu Lukman, who asked him about Indonesia's
position over Saudi Arabia's proposal to hold an extraordinary
meeting on July 18.

Crude oil prices have continued to soar, despite OPEC's
decision in June to hike production by 700,000 barrels per day
(bpd).

Commenting on the trend, Bambang said Indonesia would refer to
the response mechanism that OPEC had agreed upon.

He said that under the response mechanism, OPEC would raise
its output by another 500,000 bpd only if oil prices remained
over US$28 per barrel for 20 consecutive market days.

"Indonesia suggests that we wait for the 20 market days to
pass and afterward OPEC will take action," he said.

According to him, a sudden emergency meeting would only have a
negative psychological effect on the market.

However, he said, Indonesia remained committed to responses to
the fluctuations of the oil prices, in accordance with OPEC's
mechanism.

News agency AFP reported that in London on Friday Brent crude
for August delivery fell 33 cents to $29.93 a barrel shortly
after the market opened.

Saudi Arabia has said it would unilaterally hike output by
500,000 bpd if prices did not come down.

OPEC members were seeking agreement on Friday for Saudi
Arabia's proposal on the extraordinary meeting, but small OPEC
members were against the meeting.

The OPEC ministers' next scheduled meeting in Vienna is not
until September.

President of state oil and gas company Pertamina Baihaki Hakim
said that Indonesia was having difficulties raising output by
37,000 bpd to meet its present quota of some 1.317 million bpd.

He said that Indonesia might need another two months before
output could reach the new quota, as production was already at
its full capacity.

"It's not as simple as it looks; we're not Saudi Arabia, which
only needs to open its oil wells that have remained shut for so
long," Baihaki said earlier this week.

He said that Pertamina would strive to reach the quota by
drilling marginal oil fields, located mostly in Kalimantan and
Sumatra.

According to him, it would take an investment of between $50
million to $60 million to drill some 50 to 60 oil wells.

Baihaki said that oil companies would likely be willing to
invest, considering the favorable oil prices.

At present, he said, Pertamina and its production sharing
partners were discussing which company would raise its
production.(bkm)