- Receives support of 12 members to reactivate membership
- Indonesia left group in 2009 after becoming net oil importer
Indonesia is set to resume full membership of OPEC in December after a break of almost seven years.
The Organization of Petroleum Exporting Countries said Tuesday it has invited Energy Minister Sudirman Said to its Dec. 4 meeting in Vienna for the “formalities of reactivating Indonesia’s membership.” The Asian nation suspended membership in January 2009 after becoming a net importer of oil.
Indonesia’s role as both energy consumer and producer will help OPEC “bridge” the divide between the two groups, deepening the organization’s ties with the region where demand growth is strongest, Energy Minister Sudirman Said said in June. The nation may also be aiming to strike import deals with fellow members, according to consultant Petromatrix GmbH.
”The benefits from staying with the group outweigh by far the cost of membership,” said Hasan Qabazard, chief executive officer of Kuwait Catalyst Co. and former head of research at OPEC. “Getting first-hand access to market data, research and information that may affect the market” could be “the motivation behind Indonesia’s application.”
OPEC agreed to suspend Indonesia’s membership in September 2008 at the nation’s own request, almost half a century after it joined. The country pumped 852,000 barrels a day of oil in 2014 and consumed almost twice as much, according to BP Plc. The country’s status as a net importer could hinder its participation in any group production cuts, BNP Paribas SA predicted.
“It is certainly quaint,” Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA in London, said by e-mail. “I do not see a net importer of crude reducing its domestic production to then have to import more to meet its crude requirements.”
Indonesia’s re-entry would come at a time when OPEC has abandoned its traditional role of cutting production to support prices. The group is instead pumping about 2 million barrels a day more than its official output ceiling as it seeks to defend market-share against rival suppliers including U.S. shale drillers, according to data compiled by Bloomberg.
“The objectives seem a bit blurry,” said Olivier Jakob, managing director at Petromatrix, said by e-mail from Zug, Switzerland. “They left because they were not happy with high oil prices, and are coming back because they want to have access to supplies and investments.”
Indonesian Energy Minister Said said at an OPEC event in June that the country would discuss potential crude supply and investments with OPEC member Iran.