Indonesia Renounce OPEC Membership Over Output Cut
Andah John with agency report
Again, Indonesia has renounced its membership in OPEC as the organisation finally reached a deal to cut production.
Member countries of OPEC held a meeting in Vienna on Wednesday, where they agreed on specific targets to enact a preliminary deal. The deal is focused on easing a global crude supply glut and boosting prices.
But Indonesia was apparently not in support of the decision reached at the meeting.
The Asian country initially joined OPEC in 1962 and left it in 2009 due to its dwindling domestic oil production. That later made the country a net crude oil importer.
Then, in 2015, Indonesia rejoined the organisation.
Indonesia’s Minister of Energy and Mineral Resources Ignasious Jonan, who attended the OPEC meeting, said his country could not apply a five per cent production cut or about 37,000 barrel per day reduction as proposed by the cartel.
The OPEC proposal is part of its effort to trim 1.2 million barrel per day crude oil output in a bid to raise ongoing subdued prices.
Jonan said the only reduction Indonesia could apply is a cut of 5,000 barrel per day. That, according to him, has been agreed in next year’s development budget.
He said, “The government’s need of revenue to finance development budget in 2017 is still big.
“Besides, OPEC’s policy to raise oil prices would not benefit Indonesia, a net oil importer country.”
President Joko Widodo, who came into office in October 2014, aims at building a massive infrastructure projects. He hopes to achieve this by pursuing over 7 per cent economic expansion at the end of his five-year tenure.