Indonesia has difficulty meeting OPEC quota

Indonesia has difficulty meeting OPEC quota

Dow Jones, Jakarta

The government has welcomed the Organization of Petroleum Exporting Countries'(OPEC) decision to cut output by 900,000 barrels per day (bpd) from next month, saying the move will help keep crude oil prices stable even if supply from Iraq increases later this year.

Indonesia, Asia's only member of OPEC, also supports the plan to cut output because the country is having difficulty meeting its quotas due to declining reserves, Iin Arifin Tahkyan, a director general at the Energy Ministry, told Dow Jones Newswires on Thursday.

Under OPEC rules, Indonesia is allowed to produce 1.317 million bpd of crude, but its actual output is closer to 1 million bpd. The country only has enough proven crude reserves to last another 10 years, much lower than 70 years' worth of reserves in Venezuela, for example.

Indonesia's oil industry has been run for years by state-owned Pertamina, but is in the process of liberalization. Many new projects involving foreign companies have been put on hold while the country works out new rules to govern the industry.

Moving early to avert an oversupply of oil and to prop up prices, OPEC ministers on Wednesday decided to cut their output ceiling by 900,000 bpd to 24.5 million bpd, effective Nov. 1.