Page last updated at 12:14 GMT, Wednesday, 28 May 2008 13:14 UK

Indonesia to withdraw from Opec

Petrol station in Indonesia
Indonesia is one of Opec's least powerful members

Indonesia has said it will quit the oil producers' body Opec as it is no longer a net exporter of the commodity.

Energy minister Purnomo Yusgiantoro confirmed the move, which had been anticipated for some time.

Opec's sole member in South East Asia, Indonesia became a net importer of oil in recent times after production fell and it struggled to find new reserves.

Soaring oil prices have pushed up inflation in Indonesia and a recent cut to fuel subsidies prompted protests.

Production stagnates

Indonesia will leave the 13-member organisation when its membership expires later this year.

Opec has yet to comment on the development.

The BBC's Lucy Williamson in Jakarta says the decision is not unexpected, since Indonesia's production - largely concentrated in northern Sumatra - has stagnated and it has precious few sources of proven new reserves.

But she adds that ministers are leaving the door open for it to return, should any future discoveries of oil transform the state of its industry.

Some analysts said the move may have been triggered by unhappiness about Opec's reluctance to increase output in the face of the recent price surge, which took the cost of a barrel of oil above $135.

Opec office
Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, UAE, Algeria, Nigeria, Ecuador, Angola, Indonesia

But others said it simply reflected the reality of the country's flagging oil sector.

Indonesia is currently producing about 860,000 barrels of oil a day but growth in demand is expected to continue to outstrip output, increasing the need for imports over time.

Foreign oil firms have historically been deterred from investing in Indonesia, because of concerns about corruption and weak legal controls.

In recent times, the government has increased financial incentives for foreign firms to invest in exploration and extraction but has found itself forced to import more supplies from the likes of Iran, Saudi Arabia and Kuwait.

'Little influence'

Indonesia's exit will not affect the amount of oil it produces or imports.

"I don't see any substantive loss, other than on the prestige," said Victor Shum, from energy analysts Purvin & Gertz.

"They really have not had much influence within Opec."

But the country's growing dependence on imports is proving increasingly expensive as global prices soar.

The Indonesian government reduced direct fuel subsidies over the weekend for financial reasons, immediately sending prices up 30%.

Indonesia joined Opec in 1962, two years after the organisation was founded.

Gabon was the last country to pull out of Opec in 1995. Ecuador left the organisation in 1992 but returned to the fold last year.

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