Indonesia is leaving the Organization of Petroleum Exporting Countries because declining production and investment have made it difficult...
JAKARTA, Indonesia — Indonesia is leaving the Organization of Petroleum Exporting Countries because declining production and investment have made it difficult to meet even its own needs, the energy minister said Wednesday.
Purnomo Yusgiantoro told reporters it no longer made sense for Indonesia, the only Southeast Asian member of OPEC, to stay in the cartel.
“Even though we are sometimes a net importer and sometimes a net exporter, we are a consuming country,” he said. “Indonesia is pulling out of OPEC.”
The move means Indonesia will lose its vote at OPEC, a 13-member body that has used its vast production capacity to influence global oil prices during times of crisis. OPEC was formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. Indonesia joined in 1962.
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Indonesia is the region’s largest oil producer, but the nation of 235 million people has had to import for years because of aging wells and disappointing exploration efforts. A weak legal system and red tape have scared foreign investors away, even as domestic consumption rises.
Indonesia, which heavily subsidizes oil to protect the poor, has been faced with a budget crisis with global oil prices now hovering at around $130 a barrel.
The government is being forced to slash fuel subsidies due to soaring global prices. In the last few days, consumers have seen prices at the pump jump by around 30 percent.