Sign up | Log in



Home  >>   Daily News  >>   Indonesia  >>Energy  >> Indonesia eyes return to OPEC
NEW UPDATES Asean Affairs  15 July 2015  

Indonesia eyes return to OPEC

INDONESIA is seeking to rejoin OPEC to get access to cheaper oil supplies as demand soars and domestic production falls, but critics say the move is an unwelcome distraction from efforts to overhaul the country’s troubled energy sector.

Resource-rich Indonesia, Southeast Asia’s largest economy, was part of the Organization of the Petroleum Exporting Countries (OPEC) for almost 50 years until suspending its membership in 2009 after becoming a net oil importer.

The switch to becoming an importer came as domestic demand soared and output dropped due to a lack of investment from foreign companies, put off by complex regulations, corruption and growing economic nationalism.

With oil imports surging as the economy booms and the energy sector still in urgent need of reform, the government is looking for cheaper supplies and has taken the unusual step for an oil importer of requesting to rejoin the 12-member exporting cartel.

“It is only natural that we should build relations with exporters,” Energy Minister Sudirman Said said before heading to an OPEC meeting at the organisation’s headquarters in Vienna last month, where he was seeking to have the suspension lifted.

After the meeting, the energy ministry said that some OPEC members had backed Indonesia rejoining.

OPEC has refused to comment but analysts said the group, which has members from the Middle East, Latin America and Africa, is likely to welcome an applicant from Asia.

“We understand the application is viewed favourably because Indonesia would again provide OPEC with a member nation in Asia and thus broaden the geopolitical base of the group,” Ann-Louise Hittle, vice president of Macro Oils research at Wood Mackenzie, told AFP.

The OPEC statute states that “any country with a substantial net export of crude petroleum” can become a full member. But it also says associate membership is possible for countries who do not qualify as full members, the course Indonesia is likely to pursue, analysts believe.

Observers also say Ecuador has set a precedent for Indonesia, by suspending its membership in 1992 and rejoining in 2007.

But some observers questioned the wisdom of the move, suggesting that trying to rejoin OPEC and source cheaper supplies from outside Indonesia could slow the momentum of the government’s attempts to reform the corruption-tainted, domestic oil and gas sector.

When reform-minded President Joko Widodo took power last year, he set up a team to look at overhauling the sector, which critics have said is plagued by a shadowy “oil mafia” who skim off huge, illicit profits.

Some progress has been made. In May, state-owned energy company Pertamina said it would disband its oil-trading arm Petral, which supplies one third of the country’s daily oil needs but has been dogged for years by concerns about a lack of transparency.

But the reform team, which undertook a six-month assignment to assess the sector, made other recommendations, such as shifting to a newer type of cleaner burning, more efficient petrol, and there are fears such efforts could be stymied by the new focus on OPEC.

“What is the use of Indonesia approaching OPEC, even if only as an observer?” wrote Faisal Basri, the former head of the government’s reform team, on his blog, and added the country appeared to be “just giving up.”

Reform is seen as urgent. During its heyday in the 1990s Indonesia produced close to 1.6 million barrels of oil per day, which easily covered demand and left plenty more for export.

But by last year, Indonesia was importing 689,000 barrels a day to cover its domestic needs, the bulk of which was for transport, Benjamin Tang, a senior analyst for Wood Mackenzie’s Asia Pacific Refining research service, told AFP.

Some have called for Indonesia to wean itself off oil to help ease the looming supply crisis – but there seems little chance of that, with many new cars and motorbikes hitting the roads every day as the middle class rapidly expands.

To make matters worse, decades of generous government subsidies have made Indonesians used to cheap fuel.

Reach Southeast Asia!
10- Nations, 560- Million Consumers
And $1 -Trillion Market
We are the Voice of Southeast Asia Media Kit
The only Media Dedicated to Southeast Asia Advertising Rates for Magazine
Online Ad Rates

Comment on this Article. Send them to

Letters that do not contain full contact information cannot be published.
Letters become the property of AseanAffairs and may be republished in any format.
They typically run 150 words or less and may be edited
submit your comment in the box below

Today's  Stories                           July  15 , 2015 Subsribe Now !
• Operators hopeful of revenue boost with 4G/LTE services Subcribe: Asean Affairs Global Magazine
• Indonesia eyes return to OPEC
• Gov't spending still a threat to PHL growth – economist
Research Reports
on Thailand 2007-2008

• Textiles and Garments Industry
• Coffee industry
• Leather and footwear industry
• Shrimp industry

• Retail market still growing, despite challenging conditions
• Cambodia, VN to visit border
Asean Analysis                   July 13, 2015
• Asean Analysis July 13, 2015
Enter Science for Solving South China Sea Disputes
Advertise Your Brand

Asean Stock Watch  July  13,   2015
• Asean Stock Watch-July  13, 2015
The Biweekly Update
• The Biweekly Update June 26, 2015

ASEAN NEWS UPDATES      Updated: 04 January 2011

 • Women Shariah scholars see gender gap closing
• Bank Indonesia may hold key rate as inflation hits 7 percent
• Bursa Malaysia to revamp business rules
• Private property prices hit new high in Singapore • Bangkok moves on mass transport
• Thai retailers are upbeat
• Rice exports likely to decline • Vietnamese PM projects 10-year socioeconomic plan


This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






1.  Verifier

1. Verifier

For security purposes, we ask that you enter the security code that is shown in the graphic. Please enter the code exactly as it is shown in the graphic.
Your Code
Enter Code

Home | About Us | Contact Us | Special Feature | Features | News | Magazine | Events | TV | Press Release | Advertise With us

Our Products | Work with us | Terms of Use | Site Map | Privacy Policy | Refund Policy | Shipping/Delivery Policy | DISCLAIMER |

Version 5.0
Copyright © 2007-2015 TIME INTERNATIONAL MANAGEMENT ENTERPRISES CO., LTD. All rights reserved.
Bangkok, Thailand