Indonesia is pulling out of OPEC, because it is no longer a net oil exporter, the energy minister said Wednesday. Purnomo Yusgiantoro told reporters it did not make sense for Indonesia to be a member of the Organization of Petroleum Exporting Countries (OPEC) when the nation's domestic reserves were drying up and its consumption increasing. “We are pulling out of OPEC,” he said. “I will sign the papers today.” The country of 235 million people is Southeast Asia's only member of the organization, but it has had to import oil in recent years because of decades of declining investment in exploration and extraction. Corruption and a weak legal system have made oil companies wary of doing business here. Purnomo said the decision to leave OPEC was made by the Cabinet of President Susilo Bambang Yudhoyono, but that Indonesia could still rejoin at a later date. Indonesia will loose its seat at OPEC, a 13-member body that has used its vast production capacity to influence global oil prices during times of crisis. Victor Shum, an energy analyst with Purvin & Gertz in Singapore, said it will save Jakarta the ($3.1 million) annual fee, but cost it some prestige on the international scene. “I don't see any substantive loss, other than on the prestige,” he said. “They have been an oil importer ... they really have not had much influence within the OPEC organization.” Last month, Yudhoyono said his nation needed to concentrate on increasing domestic production, which has dropped to less than 1 million barrels a day compared to just over 1.5 million barrels a day in the mid-1990s. Meanwhile, Indonesia, which heavily subsidizes oil to protect the poor, last week raised the price of gasoline and other fuel products by nearly 30 percent because surging costs on the global market threatened to blow its budget. That move was hailed by economists, who said Yudhoyono had taken the biggest step he could without threatening economic growth. Others argued, however, that with the government still subsidizing 57 percent of retail transport and cooking fuels, it did not go far enough. Purnomo said while another price hike this year was unlikely, the government's long-term policy was to eliminate all subsidies. OPEC was first formed in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
