Indonesia happy to stay outside of Opec for now

Deputy Energy and Mineral Resources Minister Arcandra Tahar (JP/Dhoni Setiawan)

In November 2016, Indonesia decided to temporarily withdraw from Opec following the group’s decision to cut production by 1.2 million barrels of oil per day (bopd) in 2017 in a bid to rebalance what had become an oversupplied market.

“In line with President [Joko Widodo’s] instruction, we will keep the membership freeze,” Deputy Energy and Mineral Resources Minister Arcandra Tahar said on Tuesday evening, adding that the government had officially informed Opec several months ago.

In June, however, the government stated it was ready to reactivate Indonesia’s Opec membership following requests from major oil exporters, like Saudi Arabia and the United Arab Emirates, but on the condition that the country not be subject to oil production cuts.

Under Opec’s initial production reduction plans, Indonesia was obliged to reduce its output by 5 percent, or around 37,000 bopd, from this year’s target of 815,000 bopd. That figure was much higher than the 5,000 bopd it was willing to accept.

Indonesia’s oil production amounted to 785,000 bopd in mid-October, forcing the country to import more than half of its oil needs of 1.6 million bopd.

“We would not necessarily have to import oil from Opec member states. As long as the price is economical, we can import it from anywhere,” Arcandra said. (bbn)