Indonesia considers quitting the Organization of Petroleum Exporting Countries.
President Susilo Bambang Yudhoyono said Tuesday that Indonesia was considering quitting the Organization of Petroleum Exporting Countries because it was no longer a net oil exporter. "Our wells are drying," he said in the nationally televised speech, adding that the country needed to concentrate on increasing domestic production, which has dropped to less than a million barrels a day even as consumption rises.
The government opened talks Monday on whether it "should continue to stay with OPEC or withdraw our membership ... until we reach a point where we deserve to rejoin that organization," Yudhoyono told governors and heads of regencies from all over Indonesia.
The country of 235 million people is Southeast Asia's only OPEC member. But it has to import oil because of decades of declining investment in exploration and extraction due to corruption and a weak legal system that makes oil companies wary of doing business here.
Indonesia's oil output has declined steadily from oil production of 1.5 million to 1.6 million barrels a day in the mid-1990s. It produced around 860,000 barrels a day of crude oil last month and recorded a deficit of $794 million in its oil trade accounts. Raising output could take "one to three years," Yudhoyono said.
It is not the first time the country has re-evaluated its OPEC membership, but in past years teams commissioned by the government have recommended staying in the grouping to maintain good relations with other oil producers, especially the heavyweights in the Middle East.
OPEC is an intergovernmental organization made up of 13 oil-producing countries. It was first formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Indonesia, which joined OPEC in 1962, would not pull out until next year if the move was approved, because it has already paid dues thru 2008, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.
The government, meanwhile, is also mulling whether to raise domestic fuel prices by up to 30 percent to avoid a budget blowout amid the soaring cost of oil on the global market. Crude oil futures have doubled since early last year and the front-month contract on the New York Mercantile Exchange was holding near $120 a barrel in Asia after topping that level for the first time Monday in the U.S.
Indonesian subsidies have kept gasoline, diesel fuel and kerosene affordable for years to the country's millions of poor, but most analysts agree that current domestic prices are unsustainable. Still, a large hike could trigger nationwide riots and would come at an especially sensitive time, with political parties jockeying ahead of next year's presidential elections.
A big fuel price increase in 1998 triggered rioting that helped topple former dictator Suharto. Rallies also forced former President Megawati Sukarnoputri to scale back a fuel price increase in 2002. Demonstrations were small and scattered, however, when the present government slashed subsidies in 2005.
But in the first sign of unrest, protesters and police hurled rocks at each other on Sulawesi island during a demonstration against the looming price hikes Tuesday, injuring at least four people. Witnesses said the clash occurred when officers tried to prevent the protesters from burning tires and seizing a fuel tanker in the town of Makassar.
Yudhoyono said this week fuel prices could be raised anywhere between 20 percent and 30 percent. "We will decide the magnitude of the increase within two weeks," Minister of National Development Planning Paskah Suzetta told reporters Tuesday, though he did not say when the public would be informed. At present, consumers pay a little less than half a dollar for a liter of gasoline, or about $1.90 a gallon.
President Susilo Bambang Yudhoyono said Tuesday that Indonesia was considering quitting the Organization of Petroleum Exporting Countries because it was no longer a net oil exporter. "Our wells are drying," he said in the nationally televised speech, adding that the country needed to concentrate on increasing domestic production, which has dropped to less than a million barrels a day even as consumption rises.
The government opened talks Monday on whether it "should continue to stay with OPEC or withdraw our membership ... until we reach a point where we deserve to rejoin that organization," Yudhoyono told governors and heads of regencies from all over Indonesia.
The country of 235 million people is Southeast Asia's only OPEC member. But it has to import oil because of decades of declining investment in exploration and extraction due to corruption and a weak legal system that makes oil companies wary of doing business here.
Indonesia's oil output has declined steadily from oil production of 1.5 million to 1.6 million barrels a day in the mid-1990s. It produced around 860,000 barrels a day of crude oil last month and recorded a deficit of $794 million in its oil trade accounts. Raising output could take "one to three years," Yudhoyono said.
It is not the first time the country has re-evaluated its OPEC membership, but in past years teams commissioned by the government have recommended staying in the grouping to maintain good relations with other oil producers, especially the heavyweights in the Middle East.
OPEC is an intergovernmental organization made up of 13 oil-producing countries. It was first formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Indonesia, which joined OPEC in 1962, would not pull out until next year if the move was approved, because it has already paid dues thru 2008, according to Minister of Energy and Mineral Resources Purnomo Yusgiantoro.
The government, meanwhile, is also mulling whether to raise domestic fuel prices by up to 30 percent to avoid a budget blowout amid the soaring cost of oil on the global market. Crude oil futures have doubled since early last year and the front-month contract on the New York Mercantile Exchange was holding near $120 a barrel in Asia after topping that level for the first time Monday in the U.S.
Indonesian subsidies have kept gasoline, diesel fuel and kerosene affordable for years to the country's millions of poor, but most analysts agree that current domestic prices are unsustainable. Still, a large hike could trigger nationwide riots and would come at an especially sensitive time, with political parties jockeying ahead of next year's presidential elections.
A big fuel price increase in 1998 triggered rioting that helped topple former dictator Suharto. Rallies also forced former President Megawati Sukarnoputri to scale back a fuel price increase in 2002. Demonstrations were small and scattered, however, when the present government slashed subsidies in 2005.
But in the first sign of unrest, protesters and police hurled rocks at each other on Sulawesi island during a demonstration against the looming price hikes Tuesday, injuring at least four people. Witnesses said the clash occurred when officers tried to prevent the protesters from burning tires and seizing a fuel tanker in the town of Makassar.
Yudhoyono said this week fuel prices could be raised anywhere between 20 percent and 30 percent. "We will decide the magnitude of the increase within two weeks," Minister of National Development Planning Paskah Suzetta told reporters Tuesday, though he did not say when the public would be informed. At present, consumers pay a little less than half a dollar for a liter of gasoline, or about $1.90 a gallon.
No comments:
Post a Comment