Natural Gas
Global Warming

What does OPEC -- The Organization of Petroleum Exporting Countries -- do when one of its members becomes a net importer of oil? While its natural gas reserves remain significant, Indonesia has extracted three-fourths of its oil. The prize sought by the Japanese in the Pacific theatre during World War II, Indonesian oil reserves are winding down.

Consider the ironies:

(Indonesia mulls OPEC withdrawal The Economist [2008 May 6]

OPEC member Indonesia is considering leaving the oil cartel to concentrate on domestic production, the country's president has said.

Levels of oil production from its ageing wells are declining, making the country a net importer of oil when crude prices are at record levels.

It has had to cut subsidies on domestic fuel to avoid a massive budget deficit.

Some analysts have said the oil exporting group's reluctance to boost production has kept prices high.

Oil analyst Kurtubi said that - as an oil importer - Indonesia's concerns clashed with those of other OPEC members.

"[Indonesia's] interests now are different. We want oil prices to come down as high oil prices put pressure on our budget. But exporters want a reasonable or even high price since it is their main source of revenue."

Declining investment in Indonesia's oil infrastructure has seen its output drop below a million barrels a day from about 1.5m in the mid-1990s.

President Susilo Bambang Yudhoyono said the government had begun talks as to "whether we should continue to stay with OPEC or withdraw our membership".


The Indonesian government announced on Monday that it would have to cut subsidies on fuel to avoid a massive budget deficit.

The move led to a demonstration against the rising price of fuel in Makassar on Indonesia's Sulawesi island, according to one media report.

The decision to leave OPEC will be a tough one for Indonesia, says Karishma Vaswani, one of the BBC's Asia business correpondents.

But it may be necessary because of the economic and political conditions the country is facing right now, she adds.

It spends billions of dollars every year subsidising fuel for its citzens, which is a huge drain on its economic resources and on the government's coffers, our correspondent points out.

However, raising fuel prices is a politically unpopular move, so it is choosing instead to focus its resources on investing in its domestic oil and gas production, she adds.

When Indonesia has had to raise domestic fuel prices in the past, this has led to big protests against the government, which faces an election in 2009.

Indonesia is South East Asia's only OPEC representative and has been a member since 1962, two years after it was founded.

See a chronology of Indonesian Energy News reports from the US Embasssy [2005 and earlier]

Yudhoyono Is Declared Indonesia's President, Wall Street Journal (requires subscription) [2004 October 5]

"Indonesia, the only East Asian member of the Organization of Petroleum Exporting Countries, became a net crude-oil importer early this year after domestic production fell sharply following several years with little fresh investment in exploration and production."

Indonesia 2003 Oil Production Drops 8 Percent, by US Embassy Jakarta [2004 April 15]

"Indonesian gross oil production declined for the tenth straight year, dropping by eight percent to an average 1.1 million barrels per day in 2003..."

Indonesian 2001 Petroleum Statistics

"Petroleum supply and demand trends in 2001 continued to move Indonesia toward eventual net importer status [webmaster's emphasis], although its net exports still average 330,000 barrels of crude oil and condensate per day. Crude and condensate production in 2001 dropping 5.2 percent, while domestic demand for petroleum fuel products rose 2.9 percent according to preliminary figures. Natural gas production also declined 3.2 percent in 2001, but Pertamina predicts that it will rebound in 2003 to supply domestic and export demand. LNG export receipts dropped 21 percent to US $5.4 billion due primarily to the four-month suspension of ExxonMobil's natural gas production from its onshore fields and the subsequent shutdown of the Arun LNG plant. [2002]

The USA Celebrates Continuing Prosperity ... at Whose Expense? [1999 July 1]

Comments about the Indonesian riots over energy costs in April 1999
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