17 February 2020 (closed)
USD/IDR (13,707) +28.00 +0.20%
EUR/IDR (14,853) -19.58 -0.13%
Jakarta Composite Index (5,867.52) +0.58 +0.01%
While the Organization of the Petroleum Exporting Countries (OPEC)'s agreed to cut production (a deal that was joined by non-OPEC members, most notably Russia) at the organization's 171st meeting (held in Vienna on Wednesday 30 November), Indonesia decided to temporarily freeze its OPEC membership as it is reluctant to agree to a five percent cut in national crude oil production. Indonesian Energy and Mineral Resources Minister Ignasius Jonan announced this decision.
The OPEC decided on Wednesday (30/11) to cut oil production by 1.2 million barrels per day (bpd) by January 2017 (excluding oil condensates). At the meeting the organization requested Indonesia to cut crude oil production by 5 percent (roughly 37,000 bpd). However, this request goes against Indonesia's efforts to boost its sluggishly performing oil sector.
Over the past two decades Indonesia's oil production has been in a state of decline due to ageing oil fields in combination with a lack of investment in both exploration and production. Recently, the Indonesian government has implemented policies aimed at boosting the nation's oil output, partly in an effort to seek additional state revenue to finance the state budget.
Minister Ignasius Jonan added that being a net crude oil importer, Indonesia will not obtain any benefits by reducing domestic crude production. Most likely it will only cause higher fuel prices.
Indonesia had voluntarily left the OPEC in 2008 after the country became a net oil importer due to declining crude output, while domestic oil consumption rose rapidly amid Indonesia's economic growth. Then, on 4 December 2015 Indonesia officially rejoined the OPEC (despite being a net oil importer) until freezing its membership (temporarily) yesterday.