RI instability affects oil flows

RI instability affects oil flows

SINGAPORE (AFP): Increasing instability in Indonesia could disrupt the oil supply balance in Asia and disturb oil flows to Singapore and the strategic Straits of Malacca, an industry publication said on Sunday.

Singapore-based Energy Asia said events in Indonesia, including a recent diplomatic row with the United States, deserve closer attention because of their potential impact on the region's oil supply.

Indonesia produces 1.4 million barrels per day of crude condensates and accounts for between five and 10 percent of Japanese crude imports.

"Just when Middle East tensions are on the rise again, there's now the added worry that Indonesia is ready to explode, potentially disrupting domestic crude production," Energy Asia said.

"The possibility that Indonesia's problems could even disturb oil flows through Singapore and the all-important Straits of Malacca must now be contemplated," it said.

It noted that Indonesia is situated "only a few kilometers (miles) away from Singapore's 1.3 million barrels per day of refining capacity" and was just off the Straits of Malacca, through which all Middle East oil passes en route to Japan and East Asia.

Separatist demands in the provinces of Aceh and Irian Jaya are threatening to tear apart Indonesia, Southeast Asia's largest country.

A severe economic downturn and strong challenges against President Abdurrahman Wahid, who has been accused of weak leadership, have aggravated Indonesia's problems.

Jakarta's latest row with the United States, during which the American embassy closed some services and Islamic militants searched for U.S. nationals in Irian Jaya, has added a new dimension to Indonesia's troubles, the publication noted.