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Indonesia mulls Opec withdrawal | Indonesia mulls Opec withdrawal |
(31 minutes later) | |
Opec member Indonesia is considering leaving the oil cartel to concentrate on domestic production, the country's president has said. | Opec member Indonesia is considering leaving the oil cartel to concentrate on domestic production, the country's president has said. |
Levels of oil production from its ageing wells are declining, making the country a net importer of oil when crude prices are at record levels. | |
It has had to cut subsidies on domestic fuel to avoid a massive budget deficit. | |
Some analysts have said the oil exporting group's reluctance to cut production has kept oil prices high. | |
Oil analyst Kurtubi said that - as an oil importer - Indonesia's concerns clashed with those of other Opec members. | Oil analyst Kurtubi said that - as an oil importer - Indonesia's concerns clashed with those of other Opec members. |
Indonesia spends billions of dollars every year subsidising fuel for its citzens - which is a huge drain on its economic resources and on the government's coffers Karishma Vaswani, BBC News correspondent | |
"[Indonesia's] interests now are different. We want oil prices to come down as high oil prices put pressure on our budget. But exporters want a reasonable or even high price since it is their main source of revenue." | "[Indonesia's] interests now are different. We want oil prices to come down as high oil prices put pressure on our budget. But exporters want a reasonable or even high price since it is their main source of revenue." |
Declining investment in Indonesia's oil infrastructure has seen its output drop below a million barrels a day from about 1.5m in the mid-1990s. | |
President Susilo Bambang Yudhoyono said the government had begun talks as to "whether we should continue to stay with Opec or withdraw our membership". | |
Protests | |
The Indonesian government announced on Monday that it would have to cut subsidies on fuel to avoid a massive budget deficit. | |
The move led to a demonstration against the rising price of fuel in Makassar on Indonesia's Sulawesi island, according to one media report. | |
The decision to leave Opec will be a tough one for Indonesia, says Karishma Vaswani, one of the BBC's Asia business correpondents. | The decision to leave Opec will be a tough one for Indonesia, says Karishma Vaswani, one of the BBC's Asia business correpondents. |
But it may be necessary because of the economic and political conditions the country is facing right now, she adds. | But it may be necessary because of the economic and political conditions the country is facing right now, she adds. |
It spends billions of dollars every year subsidising fuel for its citzens, which is a huge drain on its economic resources and on the government's coffers, our correspondent points out. | It spends billions of dollars every year subsidising fuel for its citzens, which is a huge drain on its economic resources and on the government's coffers, our correspondent points out. |
However, raising fuel prices is a politically unpopular move, so it is choosing instead to focus its resources on investing in its domestic oil and gas production, she adds. | However, raising fuel prices is a politically unpopular move, so it is choosing instead to focus its resources on investing in its domestic oil and gas production, she adds. |
When Indonesia has had to raise domestic fuel prices in the past, this has led to big protests against the government, which faces an election in 2009. | When Indonesia has had to raise domestic fuel prices in the past, this has led to big protests against the government, which faces an election in 2009. |
Indonesia is South East Asia's only Opec representative and has been a member since 1962, two years after it was founded. |