JAKARTA (rambuenergy.com) – Indonesia’s move to rejoin the Organization of Petroleum Exporting Countries (OPEC), which holds around 80 percent of the world’s oil reserves, has been warmly welcome by the OPEC members, including Saudi Arabia, a world’s largest oil producer country.
“The Saudi Arabian government delegation appreciates and fully supports the decision of the Indonesian government to become an OPEC member again, because Indonesia is one of the founders of OPEC,” Saudi Arabia Oil Minister Ali Al-Naimi said.
The Indonesian Energy and Mineral Resources Minister Sudirman Said has formally conveyed the country’s intention to rejoin OPEC at an International OPEC meeting in Vienna, Austria.
OPEC suspended Indonesia’s membership in 2008 on Indonesia’s request. Former Indonesian energy minister Purnomo Yusgiantoro announced the Indonesian government decision at that time arguing that Indonesia saw no benefits by being a member at the time Indonesia’s oil production continued to decline to below 1 million barrels per day.
In addition, Indonesia was left frustrated as it could not influence OPEC to push down oil prices, while at home the government has to deal with demonstrations after the Susilo Bambang Yudhoyono government was forced to raise oil price due to rising world oil price.
The Indonesian government’s decision to rejoin OPEC does not mean that Indonesia has now become an exporting oil country. It is actually the opposite. Indonesia’s oil production continues to decline to below 800,000 barrels per day. Domestic production was only able to meet half of domestic consumption. Indonesia has to import half of domestic needs.
This condition has prompted some observers to question the Joko Widodo government’s decision to rejoin OPEC.
Minister Sudirman, however, argues that Indonesia decided to rejoin OPEC as it hopes to open up opportunities to cooperate and get support from the OPEC countries to support Indonesia’s energy security. “This opportunity disappeared after we declared to be inactive (as OPEC member),” said Minister Sudirman.
Minister Sudirman said that the Saudi Arabia’s delegation has told the Indonesian delegation that it will encourage the National Oil Company (NOC) of Saudi Arabia, Saudi Aramco, to invest and support Indonesia’s move to build oil refineries.
Saudi Arabia is the largest oil exporter to Indonesia. In 2014, Saudi Arabia exported 40 milion barrels of oil to Indonesia. “Therefore, the support and coopeation with the Saudi Arabia is considered strategic for Indonesia,” said Minister Sudirman. (*)
Written by Staff Writer