OPEC is considering raising its official production target at its next meeting to take into account new member Indonesia, according to OPEC delegates.
(Bloomberg) -- The Organization of Petroleum Exporting Countries is considering raising its official production target at its next meeting on Dec. 4 to take into account new member Indonesia, according to two OPEC delegates.
The production ceiling may be raised by 1 million barrels a day to 31 million barrels, the delegates said, asking not to be identified because the discussions are private. A change doesn’t imply higher production because OPEC itself said it pumped 31.57 million barrels a day in September.
The Southeast Asian nation’s re-entry after a break of almost seven years comes at a time when OPEC has abandoned its traditional role in supporting prices as it seeks to defend market share against supplies from U.S. shale drillers and other rivals. OPEC will now have 13 members, led by Saudi Arabia, the world’s largest crude exporter.
"I can’t see any benefit for OPEC countries from the rejoining of Indonesia except that it might help to end the deadlock over selecting a new secretary general," Abdulsamad al- Awadhi, who was Kuwait’s OPEC governor from 1980 to 2001, said by phone on Wednesday.
OPEC Secretary General Abdalla El-Badri is still in office after his term ended in 2013 as members couldn’t agree on candidates from Saudi Arabia, Iraq and Iran.
“The issue is that Indonesia is not meeting the criteria of an oil exporting country,” Awadhi said from London where is an independent analyst. “You can’t have a member of OPEC who can agree on a cut of production when he is an importer of crude. That doesn’t work."
Indonesia suspended its membership in 2009 after becoming a net oil importer. It pumped 852,000 barrels a day in 2014 and consumed almost twice as much, according to BP Plc.
Indonesian Energy Minister Sudirman Said confirmed in an interview in Doha that OPEC has accepted his country’s return to the group. Badri said in Doha the decision will be formally announced at the Dec. 4 meeting. Widhyawan Prawiraatmadja, Indonesia’s head of the energy ministry’s unit for performance control, was appointed Indonesia’s OPEC governor.
Indonesia will still be a net importer of crude by 2020 as the country plans to add new refinery capacity, according to a BMI Research report in October. The country’s energy minister went to Riyadh this week as Saudi Arabia and Indonesia neared an agreement to build their first jointly owned refinery in Indonesia.
The refinery is tentatively planned to have capacity of 300,000 barrels a day, with the contract signing expected by the end of this year, Said said Monday.
To contact the reporter on this story: Wael Mahdi in Kuwait at firstname.lastname@example.org To contact the editors responsible for this story: Nayla Razzouk at email@example.com Claudia Carpenter, Dylan Griffiths.
Copyright 2017 Bloomberg News.
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