Indonesia wants OPEC to maintain quotas

Indonesia wants OPEC to maintain quotas

Dow Jones, Tokyo

Indonesia's Minister of Energy and Mineral Resources Purnomo Yusgiantoro on Thursday said the Organization of Petroleum Countries (OPEC) should keep its collective production ceiling unchanged when the group meets June 15 in Vienna.

"As Indonesia, we feel OPEC should keep the quota unchanged" because recent rises in global crude prices are not related to supply and demand fundamentals, Purnomo said in an interview with Dow Jones Newswires.

He added that supply of global crude oil is currently more than sufficient, and the reason for the recent price surge is partly due to a shortage of U.S. refining capacity.

His comments follow remarks by the group's president, Sheikh Ahmad Fahad Al Sabah, Wednesday that "we will keep the ceiling the same, and even the overproduction."

"OPEC is fully aware that some member countries are producing more than their quota and some others are maintaining their quota," said Purnomo, in explaining that the group's output stands at 30.0 million to 30.5 million barrels a day, above its collective output ceiling of 27.5 million b/d.

Indonesia is producing a combined 1.125 million b/d of crude oil and condensate.

"It's (the production level) at the full capacity," he said.

In the months ahead, Purnomo said the global crude market is unlikely to face any serious supply shortage, despite an expected rise in U.S. gasoline demand during the summer driving season and traditionally strong heating oil demand in winter in the Northern Hemisphere.

But "supply of sweet, low-sulfur crude oil may continue to tighten," he said, citing strong demand for middle distillates in the months ahead from the U.S.

While Purnomo acknowledged that "prices are too high. Again, the high crude oil prices are due to non-fundamental factors, and OPEC is not responsible for high oil prices."

Tuesday, OPEC's basket of seven crude oils averaged US$47.62 a barrel, down 2 U.S. cents from Monday.

Wednesday, the front-month July crude oil futures contract on the New York Mercantile Exchange settled at $54.60/bbl, up $2.63 or 5 percent from the previous day, driven by surging demand for distillates in the U.S.

Looking ahead, Purnomo projects that global oil prices will hover at "high levels" in the next few years, up until the 2008 Olympic Games in Beijing.