Indonesian President Susilo Bambang Yudhoyono said yesterday that Indonesia was considering quitting OPEC because it is no longer a net oil exporter.
“Our wells are drying,” he said in the nationally televised speech, adding that the country needed to concentrate on increasing domestic production, which has dropped to less than a million barrels a day even as consumption rises.
The government opened talks on Monday on whether it “should continue to stay with OPEC or withdraw our membership ... until we reach a point where we deserve to rejoin that organization,” Yudhoyono said.
The country is Southeast Asia’s only OPEC member. But it has to import oil because of decades of declining investment in exploration and extraction because of corruption and a weak legal system that makes oil companies wary of doing business there.
Indonesia’s oil output has declined steadily from 1.5 million to 1.6 million barrels a day in the mid-1990s. It produced around 860,000 barrels a day of crude oil last month and recorded a deficit of US$794 million in its oil trade accounts.
Raising output could take “one to three years,” Yudhoyono said.
It is not the first time the country has re-evaluated its OPEC membership, but in the past teams commissioned by the government have recommended staying in the grouping to maintain good relations with other oil producers, especially those in the Middle East.