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Indonesia mulls Opec withdrawal
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 boost production has kept prices high.
Oil analyst Kurtubi said that – as an oil importer – Indonesia’s concerns clashed with those of other Opec members.
“[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.”
(6 May 2008)
Related from BBC: Indonesia May Leave OPEC in 2009 as Oil Output Drops
From AP: Indonesia considers quitting OPEC
Contributor Dr. Larry Hughes writes:
This was inevitable, given that Indonesia has always been a minor OPEC player. Its oil production peaked in 1977 (1.685 million bbl/da) and a lengthy “bumpy plateau” was maintained until 1996 (1.58 million bbl/da). Production has dropped off steadily since then, reaching 1.071 million bbl/da in 2006 (all numbers from BP Statistical Review). According to BP, Indonesian’s consumption surpassed production in 2003.
Whether Indonensia is “in” or “out of” OPEC will have little impact on OPEC’s production numbers.
Saudi Fears Of High Oil Prices Fade With Demand
Gregory Meyer and Spencer Swartz, Dow Jones via Cattle Network
For all the benefits of soaring oil prices, Saudi Arabia has historically viewed them with a measure of trepidation.
Besides the worry that high energy prices could hinder economic growth and eat into demand, Saudi officials have traditionally argued that sky-high crude prices would hasten the development of renewable energy that would displace petroleum.
But as oil prices have crept up in recent years, from the $20 a barrel range early in the decade to Monday’s record above $120 a barrel, the kingdom has repeatedly used its clout within the Organization of Petroleum Exporting Countries to sanction an ever-higher price deck. At the same time, while Saudi Arabia’s powerful Oil Minister Ali Naimi has at times emphasized price moderation, he hasn’t been as vocal as some predecessors on the worry that high prices threaten the long-term viability of Saudi Arabia’s core asset.
Interpreting Saudi Arabia’s strategy is challenging, in part because Naimi and other top petroleum officials don’t often speak publicly and choose their words carefully when they do. Saudi oil ministry officials declined to comment for this article.
(5 May 2008)
Russia agrees 40% rise in energy prices
Catherine Belton, Financial Times
Russia on Tuesday signed off on a series of steep price rises for domestic gas, power and railway services for the next four years on the eve of Dmitry Medvedev’s inauguration as the country’s new president.
Mr Medvedev, who will be sworn in as Russia’s president on Wednesday, will inherit a potentially poisoned chalice of increasing economic and political risks as inflation surges to as much as 14.3 per cent. Thousands of people across the country took to the streets on May Day in rare demonstrations against rising food prices and living costs, the same day as a pre-election price freeze on basic foodstuffs expired.
(6 May 2008)