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Indonesia May Return To OPEC But Won’t Cut Production

Indonesia

Indonesia is open to rejoining OPEC, but only if it can determine its own production levels, the country’s Energy and Mineral Resources Minister Ignasius Jonan told Reuters in an interview.

“We would have to have a concession for not following cuts from time to time, Jonan said.

Indonesia, which produces some 800,000 bpd, left OPEC last November, right after OPEC agreed to curb production to prop up international prices. That happened less than a year after the cartel’s only East Asian member rejoined its ranks.

Per the agreement, OPEC had asked Indonesia to cut 37,000 bpd from its daily output, which, Jonan said at the time, the country would not do. What he agreed to was a 5,000-bpd cut that was stipulated in the 2017 budget.

Indonesia is a net importer of crude oil, and a massive one: it imports twice what it produces, as local fields near depletion and demand grows. Current prices are comfortable for net importers, and Indonesia is no exception, especially in the context of an investment program announced earlier this year that should boost its local production.

The US$200-billion investment plan was announced in late April and will involve tendering 14 untapped oil and gas blocks in hopes that foreign players will show an interest in developing them. To sweeten the offer, Jakarta has offered potential bidders tax-free imports of equipment and technology. Related: Electric Car Industry Faces A Looming Supply Shortage

The energy minister’s current visit to the U.S. is part of an international tour aimed at promoting the program to investors including Exxon, Chevron, and ConocoPhillips.

At the same time, the state-owned energy major, Pertamina, is expanding its international presence, with a focus on Iran and Russia. The company is already present in Algeria, Iraq, Tanzania, and Nigeria. Its international oil and condensate production capacity is 150,000 boepd, while domestic production is around 308,000 bpd.

By Irina Slav for Oilprice.com

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