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)