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May 29, 2008

Indonesia to quit OPEC

Indonesia will quit the Organization of the Petroleum Exporting Countries because as a net oil importer it is not happy with high global crude prices, Reuters quoted the energy minister as saying Wednesday.

The country, an OPEC member since 1962, has seen its influence within the cartel wane as its production declines, even as the producer group gains more global clout with the admission of Angola and the rejoining of Ecuador last year.

On Saturday Jakarta was forced to make an unpopular fuel price hike as it struggled to bear the cost of importing gasoline and diesel at record high prices and selling it at heavily subsidized prices, one legacy of being a major oil producer for over a century and OPEC's only Asian member.

"Actually there is also one rationale -- that we are not happy with the high oil prices. Because we are an oil producer and we are an oil consumer," energy minister Purnomo Yusgiantoro said.

Global benchmark U.S. crude has risen by more than 30 percent this year to $127 a barrel, briefly rising above $135 last week.

But Indonesia's crude oil output has fallen in recent years due to ageing wells, a lack of investment, and the absence of any major oil finds.

Its status as a net importer means it would benefit from lower oil prices, putting it at odds with other OPEC members, who favor higher prices.

Earlier this month, President Susilo Bambang Yudhoyono said that Asia's only member of the cartel may quit the group, citing the decline in crude oil output.

It was not clear when Indonesia would formally leave the grouping, in which it has a paid up membership until the end of the year.

"The membership will expire by the end of the year, but I think soon...we are pulling out from OPEC," Purnomo told a meeting of foreign journalists.

More on Indonesia


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