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Indonesia is considering withdrawing from the Organization of the
Petroleum Exporting Countries (OPEC) amid a steady decline in the
country's oil production, the President said earlier this week.
Indonesia is the only OPEC member that is a net oil importer, as aging
wells and lack of investment in new exploration has hurt production. "During a Cabinet meeting, we discussed whether we
would stay in OPEC or leave as we struggle to boost our oil production
to reach a level where we deserve to be a member of the organization,"
President Susilo Bambang Yudhoyono said in opening remarks at a
national meeting for development planning.
"Our oil production is currently below 1 million barrels per day
because of aging wells. We need about two or three years to increase
production."
Indonesia joined OPEC in 1962 as the group's only Southeast Asian
member. Its daily oil production currently stands at around 927,000
barrels, down from 950,000 barrels per day last year.
Calls for the government to withdraw from OPEC have been on the rise
the past few years, not only because of the slide in oil output but
also because of the financial costs of membership.
As a net importer, Indonesia is missing an opportunity to reap the
benefits of the persistent surge in global oil prices, which are now
hovering around US$120 per barrel.
Instead, the government has had to allocate massive spending for fuel
and electricity subsidies. For the fuel subsidy alone the government
set aside Rp 126.8 trillion, more than 12 percent of this year's total
spending.
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