RI TO QUIT OPEC AMID WORLD OIL PRICE HIKES

By Andi Abdussalam

     Jakarta, May 11 (ANTARA) - While polemics were going on on its plan to increase domestic fuel oil prices prompted by world crude price hikes, the Indonesian government came up this week with an idea to quit the Organization of Petroleum Exporting Countries (OPEC).
     The idea is plausible. Indonesia is no longer a net oil exporting country. The volume of its imports has exceeded its exports. Thus, Indonesia is no longer an exporting country, which is a plausible reason to quit the OPEC.
     The government's intention to say a goodbye to the oil cartel was hailed by the House of Representatives (DPR), yet a number of analysts still saw some benefits if Indonesia maintained its membership in the organization.
     Energy and Mineral Resources Minister Purnomo Yusgiantoro said this week Indonesia was likely to quit OPEC after 2008. The plan to quit the oil cartel surfaced at a limited cabinet meeting at the presidential office.
     "This year we have already paid our membership fee, so that  possibly will quit only after 2009," Purnomo Yusgiantoro said.
     The government still has to study the consequences of its plan to quit OPEC. "It (the plan) is just the result of talks at a cabinet meeting. So, we need to study its consequences in detail."
     The plan was based on the fact that Indonesia was no longer a net oil exporter, as it had imported oil in large quantities, he said.    
     President Susilo Bambang Yudhoyono has said Indonesia is no longer an oil exporting country but it had become an oil importing nation.
     "That's why at a limited cabinet session, we considered a plan to temporarily quit as an OPEC member while at the same time increasing our oil production," the President said.
     The House of Representatives' Energy Commission supported the government plan. The commission's chief Airlangga Hartarto said as an oil importer now Indonesia is disadvantaged of its OPEC membership.
     "OPEC is a cartel of countries who seek to maintain world crude prices at a high level. This will harm Indonesia's interest," he said.
     The House energy commission has since two years ago called on the government to quit the oil cartel.
     House Speaker Agung Laksono said Indonesia's domestic oil prices much depended on the price of world oil. Indonesia's oil production and consumption were quite unbalanced with a production of 925,000 barrels per day while its consumption reached 1.4 million barrels per day.
     He said that 15 years ago, Indonesia's daily oil production reached 1.4 million barrels while its consumption reached only about 300,000 barrels per day.
     "For this we have a plan to quit the OPEC because it is no longer appropriate for us to remain a member," Agung Laksono said.
     He said that Indonesia actually still had large oil reserves it could exploit to boost its production. If Indonesia is able to increase its oil production it should not face difficulties everytime oil prices increased in the world market.
     Oil industry observer Dr Kurtubi concurred with the House Speaker. Indonesia could have reaped great profits from the current high world crude oil prices and would not have plunged into its present difficult situation, if it had managed its oil potentials well.
     He said Indonesia's failure to manage its oil wealth properly in the past few years had caused its crude oil production to decline and led to its dependence on oil imports which had now placed the country in a difficult position.
     In the current situation where crude oil prices have surged to around US$125 per barrel, the government had to spend large amounts of funds to import oil.
     "If we want to be safe and gain profit from world crude price hikes, we have to pump at least 1.3 million barrels per day. If that level is achieved we will be safe in the world oil turbulence," he said.
     With an output of 1.3 million barrels per day, the government could afford to spend Rp26 trillion to Rp30 trillion on fuel oil subsidy without having to raise domestic fuel oil prices, he said.
     But while its production level is nowadays only at 925,000 barrels per day, the government is considering quitting the oil cartel after 2008.
     Former OPEC oil analyst Abdul Muin has suggested otherwise, however. He said an OPEC membership would still benefits Indonesia.
     "The main benefit for Indonesia in maintaining its OPEC membership is that it will have the guarantee from the organization to obtain oil supply at a lower price," he said.
     Therefore, Abdul Muin, who became an OPEC oil analyst between 1994 and 2002, called on the government to consider carefully its plan before deciding to raise fuel oil prices.
     "Quitting OPEC would have adverse effects on Indonesia's economy," said Asnawi Bahar, chairman of the Indonesian Chamber of Commerce and Industry for West Sumatra.
     He said that if Indonesia quit the organization, it would mean that Indonesia also quit the platform a global economic players.

(T.A014/A/HNG/B003).(T.A014/A/A014/B003) 11-05-2008 21:54:13

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