Net Oil Importer Indonesia Officially Rejoined OPEC
Per 4 December 2015 Indonesia officially rejoined the Organization of the Petroleum Exporting Countries (OPEC), seven years after the country had voluntarily exited the organization as it had turned in to a net oil importer. On the 168th meeting of the OPEC, held in Vienna (Austria), OPEC President (and Nigeria's Oil Minister) Emmanuel Ibe Kachikwu welcomed Indonesia back into the organization. At the meeting Indonesia was represented by Indonesian Minister of Energy and Mineral Resources Sudirman Said.
Minister Said stated that Indonesia can take advantages of rejoining the OPEC. For example, Indonesia will now have easier access to cheaper oil supplies. This implies that the government can save some foreign exchange reserves while meeting increasing oil demand from the Indonesian population. Furthermore, rejoining the OPEC also makes Indonesia a more attractive destination for investment in the oil & gas industry, while at the same time it opens opportunities for Indonesia to operate oil & gas blocks in OPEC member countries.
Widhyawan Prawiraatmadja, Indonesia's new OPEC Governor, said rejoining the OPEC is important as energy demand in Indonesia is large and continuously increasing. Therefore, it should ensure availability of energy sources. Moreover, as an OPEC member Indonesia has easier access to technological developments and research in the oil & gas industry.
Although Indonesia has plenty of potential for renewable energy sources (for example geothermal energy and coalbed methane) and the government is encouraging investment in the renewable energy sector, the country will remain dependent on fossil energy sources for the middle-long term, primarily oil and coal.
Most analysts are skeptical about Indonesia's return into the OPEC because Southeast Asia's largest economy turned into a net oil importer as domestic production has been in a state of decline over the past two decades while domestic oil consumption has surged rapidly amid robust economic growth.
Investment in Indonesia's oil & gas industry stood at USD $13.6 billion in the January-October 2015 period, well below the government's full-year target of USD $23.7 billion. This weak performance is due to the low oil prices and Indonesia's unappealing investment climate in the oil & gas industry.
Indonesia's crude oil production may climb in 2016 as the Banyu Urip oil field in East Java and the Bukit Tua field off the coast of Madura have come online. The Banyu Urip field is expected to reach its peak production rate (around 165,000 barrels per day/bpd) in mid-2016, while the Bukit Tua field is expected to produce 20,000 bpd in April 2016.