Indonesia, Net Oil Importer, Hopes to Rejoin Exporters' Cartel OPEC

BY :RANGGA PRAKOSO & ARIENTHA PRIMANITA

JUNE 05, 2015

Jakarta. The Indonesian government claims it has received backing from all members of OPEC to rejoin the ranks of the global cartel of oil exporters – despite being a net importer of the commodity.

Sudirman Said, the energy minister, who is in Vienna this week for a meeting of ministers of the Organization of the Petroleum Exporting Countries, said on Friday that all member states had agreed to Indonesia being a member once again after six years outside the cartel, during which it has become a net crude importer.

"They support Indonesia to become a full member considering we are one of the founding countries that had a role in OPEC 's establishment and development," Sudirman said in a press statement.

He did not address the glaring discrepancy between OPEC being a group of oil exporters and Indonesia being a net importer. Indonesia produced 711,800 barrels of crude per day in 2013, the latest year for which OPEC data are available; yet domestic demand exceeded 1.43 million barrels per day.

Under the OPEC statutes, to be a full member a country must be a net oil exporter and accepted by a majority of three-fourths of the full members, of which there are currently 12. A country that fails to qualify for full membership can become an associate member under special conditions.

There was no statement from OPEC on awarding any kind of membership to Indonesia.

The energy ministry statement quoted Saudi Arabia’s oil minister, Ali Al-Naimi, as expressing his support for Indonesia to rejoin OPEC as a member, given the history of Indonesia's involvement in the organization.

Naimi also said in a bilateral meeting with Sudirman that Saudi Arabia would encourage its state oil company, Saudi Aramco, to invest in refinery development in Indonesia to guarantee the long-term supply continuity for Indonesia as a consumer and for Saudi Arabia as a producer.

The kingdom is Indonesia’s biggest oil supplier, shipping 40 million barrels of crude to the archipelago last year, according to Indonesia’s Central Statistics Agency (BPS).

Sudirman also said in the statement that the United Arab Emirates and Iran had offered cooperation to help Indonesia meet its energy needs.

In a bilateral meeting at the Hofburg Palace in Vienna, delegates from the UAE expressed interest in increasing their investment in Indonesia’s oil and gas sector through Emirati state-owned oil company Mubadala Petroleum.

Mubadala currently operates the Sebuku oil and gas block and is conducting a joint study in the Natuna block as the first stage of exploration.

Sudirman said the UAE government also offered crude oil and refined fuel through direct purchase from Mubadala, and investment in refinery development in Indonesia.

Indonesian officials also met with Iranian delegates, in a follow-up to talks held in Iran last month involving Sudirman and Sofyan Djalil, Indonesia’s chief economics minister.

“The latest update is for the possibility of Pertamina” – Indonesia’s state-owned energy company – “to get into the upstream oil sector [in Iran], both as an operator or shareholder,” Sudirman said in the statement.

Indonesia called for more detailed discussions and for Iran to increase its supply of crude to Indonesia over the long term, with an eye on the lifting of international sanctions against Tehran.

Iran also offered to export condensate and liquefied petroleum gas to Indonesia, Sudirman said.

The government also welcomed Iran’s offer for Indonesia to invest in the fertilizer industry in Iran to take advantage of low gas prices of around $2 to $3 per million British thermal units (MMBTU). “If we implement this program, Indonesia can produce competitive urea fertilizer in the long term,” Sudirman said.

GlobeAsia

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