Govt. panel recommends Indonesia leave Opec

JAKARTA — A government panel has proposed that Indonesia cease being a member of the Opec and become an observer because of the financial costs of membership, a document obtained by Reuters on Tuesday showed.

By (Reuters)

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Published: Wed 20 Apr 2005, 10:51 AM

Last updated: Thu 2 Apr 2015, 4:07 PM

Indonesia, Asia-Pacific’s only Opec member, is unable to meet its assigned Opec supply quota and last year become a net oil importer due to production problems at ageing wells and a lack of fresh funds for investments.

The panel of senior oil and other government officials, appointed in February, examined three proposals: remain an Opec member, quit the group, or change its status to that of observer, the document showed. “Considering the above, it can be recommended that if possible (Indonesia) take the third alternative, which is to remain a member but seek an observer status, so freeing us from the obligation to pay contributions,” said the document.

Indonesia joined Opec in 1962, just two years after the group was founded in Baghdad, but parliament and industry groups are now calling for a withdrawal.

Reducing status to observer would effectively mean Indonesia leaving the Organisation of the Petroleum Exporting Countries because it would be excluded from any policy decision making. An Indonesian government official said the cabinet would either decide to stay or quit as an Opec member.

“If Indonesia were to become an observer, then it would mean that it would quit from Opec. It is up to Opec, not Indonesia, to decide if Indonesia could become an observer,” he said.

Several other producers, including Russia, Mexico and Oman, have observer status at Opec. That allows them to observe the formal opening of Opec conferences but they do not attend meetings on production policy and have no say in production, price or other policy.

The document said that as an observer, Jakarta would be free from Opec’s annual membership fee of $1 million and contributions of $52,016 a year to the Opec fund, a charity.

Ecuador and Gabon both terminated Opec membership in the 1990s, both citing the cost of annual fees.

Indonesian legislator and former mines and energy minister Ginandjar Kartasasmita said Indonesia was not benefiting as a member if it was a net oil importer.

Jakarta estimates crude production will fall 6 percent in 2005, from last year’s 968,200 bpd, but it aims to raise output by around 25 percent to 1.18 million bpd by 2008.

It produced 951,800 bpd last month. The country is trying to boost output by offering incentives for development in marginal and ageing fields.

Oil regulator BPMIGAS had said there were 30-50 marginal fields that could produce a total of 50,000 bpd of oil.

There were 20-30 ageing oilfields that could produce more through technology, it said, adding the old and marginal fields could together produce around 100,000 bpd.

Mines and Energy Minister Purnomo Yusgiantoro, formerly Opec president, has said Indonesia’s proven and probable oil reserves were 10.82 billion barrels.

Companies operating in the country include Caltex Pacific Indonesia, top Chinese offshore oil and gas producer CNOOC, and Medco Energi Internasional Tbk.



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