JAKRTA: Indonesia’s withdrawal from OPEC membership is unlikely to affect the country’s oil supply security, given the limited benefits seen since it rejoined the group on January 1 this year, industry observers said.
The net importer of crude oil had expected OPEC membership re-activation as a step towards energy security, but saw little benefit in terms of price and supply from other group members.
Indonesia reactivated its OPEC membership in order to have direct access to crude oil exporters, energy and mines ministry spokesman Sujatmiko said Thursday, adding that with access routes having been opened, the membership did not offer anything more to the country.
“The OPEC membership for Indonesia is useless as we have to pay Eur2 million [in annual fees] but we cannot get cheap crude imports,” said Komaidi Notonegoro, an analyst with the ReforMiner Institute.
“The only benefit of the membership is rapid information about crude supply from producers,” he added.
Indonesia’s withdrawal from OPEC follows a disagreement with the decision Wednesday to freeze the group’s collective output at 32.5 million b/d.
OPEC asked Indonesia to cut its production by 5%, or about 37,000 b/d, which was difficult for the country, energy and mines minister Ignasius Jonan said in a statement Thursday.
“The production cut would have been a risk for Indonesia, which depends on crude for revenue,” Notonegoro added.
“Indonesia’s need of revenue [from oil and gas] is still huge and in the 2017 draft state budget it was decided to cut oil production by 5,000 b/d,” Jonan said.
“Indonesia can cooperate with other crude producers through good diplomacy without being an OPEC member,” Notonegoro said, citing state-owned company Pertamina’s refinery and crude supply deals with Saudi Aramco and Russia’s Rosneft.
“The most important aspect of energy security is not being an OPEC member, but building strategic petroleum reserves,” Inas Nasrullah, member of Commission VII on Energy and Mines Issues, said.
