Indonesia Considers Withdrawing from OPEC

JAKARTA, May 6, 2008 (Dow Jones Newswires)

Indonesia is considering whether it should give up its membership in the Organization of Petroleum Exporting Countries as the country is no longer a net oil exporter, President Susilo Bambang Yudhoyono said Tuesday.

"During a cabinet meeting yesterday, we were thinking whether we should continue to stay with OPEC or withdraw our membership temporarily while increasing our (crude oil) output so that we deserve to be an OPEC member," Yudhoyono said in a speech before governors and heads of regencies from all over Indonesia.

This is not the first time the government has evaluated Indonesia's membership in OPEC, as the only Southeast Asian member of the organization became a net oil importer in the early part of the decade.

In recent years the government commissioned a team to study Indonesia's OPEC membership, but it recommended staying in OPEC to maintain good relations with other oil producers, especially the Middle Eastern heavyweights.

An official at the Energy and Mineral Resources Ministry told Dow Jones Newswires that the government will seek input from local experts and economists on the matter next week.

Indonesia's departure from OPEC wouldn't likely have any physical impact on OPEC production as the country already produces well below its official quota. However, the cartel would be losing one of its doves - Indonesia has repeatedly argued for increased OPEC production.

Analysts blame legal uncertainties that have discouraged investment in the country's upstream oil business for a decline in crude oil output to its lowest level in more than 30 years.

Meanwhile, domestic consumption of petroleum products has been rising.

Indonesia produced 859,853 barrels a day of crude oil in April, and recorded a deficit of $794.9 million in its oil trade accounts.

Indonesia joined OPEC in 1962, two years after the group was founded.

JAKARTA, May 6, 2008 (Dow Jones Newswires)