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Indonesia is
reviewing its status in the oil-producers' club as dwindling production is
pushing it closer to becoming a net importer, the country's energy minister
said.
Purnomo
Yusgiantoro was quoted in the Jakarta Post newspaper as saying that a
consideration to withdraw from Opec (Organisation of Petroleum Exporting
Countries) would be carefully weighed.
Analysts warned
that such a move could backfire and cause foreign investment in the beleaguered
sector to decrease further as the country is looking to boost interest.
Indonesia is the
only Asian member of Opec.
Sensitive
diplomacy
Any move to end Jakarta's 43-year membership would have to be carefully weighed
as it "involves our diplomatic ties with other Opec members, especially the Gulf
countries", Yusgiantoro said, adding that a panel is looking into the issue.
Indonesia joined the 11-nation Opec, which supplies nearly a third of global
crude oil, in 1962, but the country's oil output has fallen 5% annually over the
past decade to less than a million barrels per day (bpd).
Its crude oil exports dropped sharply to 30,000 bpd in 2004 from 100,000 bpd in
2003, forcing the country to become a net oil importer for four months of last
year, the ministry's oil and gas director-general Iin Arifin Takhyan said.
High stakes
Analysts say the stakes are high for Indonesia if it exits Opec.
Kurtubi, an oil
and gas analyst from the Centre for Petroleum and Energy Economic Studies, said
Indonesia risked losing valuable foreign investment in the sector as it would no
longer be viewed as having oil potential.
"If Indonesia leaves Opec, it will affect the flow of oil and gas investment
into the country," he warned.
Indonesia would also lose access to an organisation whose decisions influence
oil supply and prices, he said.
Kurtubi said Indonesia should focus instead on ways to boost output to meet
domestic demand growing at up to 7% a year.
Ageing oilfields
"The decline is due mainly to the natural decline in production of ageing oil
fields, a lack of new investment in deep-sea exploration, and regulatory
problems that need to be quickly addressed," Kurubi said.
He added there was too much red tape in oil and gas laws, making investors
reluctant to commit large amounts of capital for the long term.
Other analysts said Indonesia's withdrawal was unlikely to shake Opec as its six
Middle Eastern members, including Saudi Arabia, control 63% of the world's oil
reserves.
Opec's members are Saudi Arabia, Iran, Venezuela, Iraq, United Arab Emirates,
Kuwait, Nigeria, Libya, Indonesia, Algeria and Qatar.
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