Indonesia plans to pull out of OPEC

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

The government has set up a team tasked with reviewing Indonesia's membership of the Organization of Petroleum Exporting Countries (OPEC) due to the country's falling crude oil production, which is bringing the country closer to becoming a net fuel importer.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro told a Monday hearing with the House of Representatives' mining and environment commission that despite the advantages of being a member of the oil cartel, the country faced several problems in maintaining its membership.

"We are studying whether we are already a net oil importer and thus no longer eligible to be an OPEC member," the minister said. "The team will forward the results of the study to the Cabinet as any plan for our withdrawal from OPEC will be a diplomatic issue."

The team is led by Rachmat Sudibyo, a former chairman of the Oil and Gas Upstream Regulatory Agency (BP Migas).

Purnomo said that Indonesia's crude oil imports and exports were roughly in balance, but that there were some disparities in the import and export value of oil products.

The ministry's Director General for Oil and Gas Iin Arifin Takhyan said Indonesia was a net oil importer for four months of last year. The country's oil output has fallen by 5 percent annually over the last decade to less than one million barrels per day (bpd).

He acknowledged that the country's crude oil exports dropped to 30,000 bpd in 2004 compared to 100,000 bpd in 2003.

Reports from the Central Statistics Agency (BPS) said that oil and gas imports -- including both crude oil and oil products -- increased sharply by 52.36 percent in 2004.

The increasing imports were due to declining oil production from the country's aging oil fields and rising domestic demand of up to 7 percent per year.

Purnomo said that any plan to withdraw from OPEC would have to be a political decision by the government as it "involves our diplomatic ties with other OPEC members, especially the gulf countries."

Indonesia joined OPEC in 1962, two years after Iran, Iraq, Kuwait, Saudi Arabia and Venezuela established the group.

Last month, Indonesia, the only OPEC member in Southeast Asia, only produced 952,600 bpd of crude, well below its 1.4 million bpd quota.

House energy commission members, who backed the withdrawal of the country from OPEC, said the $2 million annual membership fee was to expensive in light of the benefits received.

"The commission recommends that the government withdraw from OPEC as it is no longer beneficial for us to stay in the organization," the legislators said in their response to Monday's hearing.