RI should stay with OPEC to save benefits

Thu, 05/08/2008 11:03 AM  |  Business

Indonesia should not withdraw its membership from the Organization of the Petroleum Exporting Countries (OPEC) and lose the privilege of tapping into the coalition's abundant oil supply at low prices, an official says.

Abdul Muin, a former OPEC executive and deputy chairman of the upstream oil and gas regulator BPMigas, said the government should thoroughly reconsider quitting as it could put the sustainability of the country's oil supply at risk.

"Due to good relationships between members, we can lobby for a smooth flow of crude supplies and get cheaper prices, and when it is calculated we obtain annual benefits of more than 2 million euros," he said.

Muin said leaving the group would scrap the advantage of obtaining supply as most of the country's oil was imported from member countries, which together control some 40 percent of the world's oil supply.

President Susilo Bambang Yudhoyono said Tuesday the country should temporarily withdraw its membership because the country was no longer able to export crude oil due to a domestic production drop and soaring consumption.

Indonesia is the only OPEC member to be a net oil importer, as aging wells and a lack of investment in exploration have hurt production.

Oil output has steadily declined over the past five years, reaching a record low of 950,000 barrels a day (bpd) last year. The government has also revised down this year's production target to 927,000 bpd from 1.034 bpd million.

Yudhoyono has set up a special committee tasked to study alternatives to quitting the membership. The committee is slated to announce its decision next week.

Calls to withdraw from OPEC have surfaced since 2005, not only on declining oil output but also owing to complaints about the cartel's 2 million euros a year membership fee.

Lawmaker Tjatur Sapto Edy said quitting OPEC would disrupt a supply commitment that had existed for decades between Indonesia and other OPEC member countries. -- JP

A  |   A  |   A  |    |   |    |    |    |  

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.