Indonesia to pull out of OPEC with immediate effect as oil production declines

Indonesia, the only OPEC member in Southeast Asia, will pull out of the group after aging fields and declining production force the region's biggest economy to boost imports as crude oil prices reached records. Energy Minister Purnomo Yusgiantoro will sign a decree today [28 May 2008] to exit the Organization of Petroleum Exporting Countries. "When I get back to the office ... I will sign that we withdraw from OPEC," Yusgiantoro told a group of foreign reporters at a lunch in Jakarta. The nation, a member since 1962, has been considering leaving the body in the past three years.

The country's oil output has slumped 49% from a peak of 1.686 million barrels a day [mbpd] in 1977 while subsidies to cap domestic diesel and gasoline prices may exceed $13 billion this year. Indonesia raised fuel prices by almost 30% this month to reduce the government's subsidy burden. Indonesia's daily crude output has fallen below 1 mbpd since February 2004. Indonesia produced an average 883,000 barrels of crude oil a day in 2006, while its consumption of refined oil products that year was 1.061 mbpd.

- The Indonesians have been talking about withdrawing from OPEC since 2005, and they have been talking about it again at the beginning of May [2008]. For the past months and years, the peakoiler community has been wondering : will they, or won't they - and when?

But today, the question is answered once and for all. Today, Indonesia is withdrawing from OPEC. This marks the end of an era for the country, and it will have wide-ranging implications for the South-East Asian region as a whole as well. And it is not only Indonesia's crude oil but also natural gas that is rapidly running out. Countries dependent on Indonesia's fossil fuel exports, including Japan and Singapore are already starting to feel the impact on their energy security.

(2008-05-28 23:41:15 SGT) [Energy] Permalink

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