Indonesia considers quitting OPEC

President Susilo Bambang Yudhoyono said Tuesday [6 May 2008] that Indonesia was considering quitting the Organization of Petroleum Exporting Countries [OPEC] because it was no longer a net oil exporter. "Our wells are drying," he said in the nationally televised speech, adding that the country needed to concentrate on increasing domestic production, which has dropped to less than a million barrels a day even as consumption rises. Indonesia's oil output has declined steadily from oil production of 1.5 million to 1.6 million barrels a day in the mid-1990s. It produced around 860,000 barrels a day of crude oil last month [Apr 2008] and recorded a deficit of $794 million in its oil trade accounts.

- This is not the first time that Indonesia has considered quitting OPEC (see Asia Times article dated Aug 2005), but they might really mean it this time. Over the past years, I have watched as their daily crude oil production dropped from just over 1 mbpd [million barrels per day] to below 1 mbpd, while demand went the other way, creeping up from below 1 mbpd to just over 1 mbpd. Once that crossover point was reached (as I posted on the EnergyResources Yahoo group back in May 2004), Indonesia effectively became a net crude oil importer and its status as an OPEC member has been thrown into doubt.

Indonesia is to Asia as Mexico is to America. Failing producers, growing consumers. For obvious reasons crude oil demand cannot possibly be greater than supply for any extended period of time. The growing economies of the world are going to learn about hard limits the hard way.

Crude oil hits $122.73 record on supply disruptions and global demand

This article belongs to the NYMEX crude oil price records story arc.

bloomberg.com :

Crude oil was little changed near $122 a barrel in New York after rising to a record yesterday [6 May 2008] on concern supply from Nigeria may be disrupted and speculation that high oil prices won't stall Asian demand. Yesterday, oil climbed to an intraday record of $122.73 a barrel. Supply shortfalls will probably send oil to between $150 and $200 a barrel within two years, Goldman Sachs analysts said in a report. Chinese oil consumption will climb 4.7% to 7.89 million barrels a day this year, the IEA said on April 11. Global demand will rise 1.5% to 87.23 million barrels a day, the IEA said.

- Sure, global demand may climb to 87 million barrels per day [mbpd], but will global supply be there? We're not so sure about that. If and when the Saudi's ever come clean as to the true state of Ghawar, the jig is up. The contrarians and the peakoiler community are now looking beyond $200 oil and are making the call for $300 oil and beyond. We're at $120 oil and there are still many people in the developed countries who look upon it with not much more than vague annoyance. It would take something more to actually change behaviour. But I'd suppose we ought to be careful what we wish for, because a. we could actually get it, and b. we could get it much sooner than expected.

(2008-05-07 13:08:58 SGT) [Energy] Permalink

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