Indonesia quits OPEC over oil production cuts

OPEC Headquarters

Indonesia has suspended its membership in oil producer club, the Organisation of Petroleum Exporting Countries again, as the crude oil importer said it does not agree to the club’s production cuts.

Indonesia first joined OPEC in 1962 and left it in 2009 due to its dwindling domestic oil production, which made it a net crude oil importer.

The country joined OPEC again in 2015.

Energy and Mineral Resources Minister Ignasious Jonan, who attended the OPEC meeting in Vienna, said Indonesia 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 parts of its effort to trim 1.2 million barrel per day crude oil output in a bid to raise ongoing subdued prices.

Jonan said that the only reduction Indonesia could apply was a cut of 5,000 barrel per day, which had 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 is attempting to build a massive infrastructure projects to pursue over 7 per cent economic expansion at the end of his five-year tenure.