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.

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