Indonesia withdraws from Opec

IT WAS a sad day for Subroto yesterday, as the bowtie-donning Indonesian bemoaned his country's withdrawal from Opec, the fractious oil cartel he led through the first Gulf war with savvy diplomacy and Javanese charm.

"If it was me, there is no need to withdraw," Subroto, a former oil minister who is now about 80 years old and retired from public office, said in a telephone interview after the Organisation of the Petroleum Exporting Countries formally accepted Jakarta's request to suspend its membership.

As secretary general from 1988 to 1994, Subroto steered Opec through the first Gulf war, when one of its founding members, Iraq, invaded another, Kuwait, prompting a third, Saudi Arabia, to boost supply to tame an oil price spike to above US$40 a barrel.

Indonesia joined Opec in 1962 as its seventh member and the sole Asian representative, punching above its weight in terms of influence during Subroto's reign.

But influence waned over the last decade as ageing fields pumped far less than its official quota.

Despite being an oil producer for more than a century, Indonesia's growing fuel demand, depleting reservoirs and poor investment record turned it into a net importer in recent years. With heavily subsidised domestic fuel prices, rising imports at a time of soaring world prices put Jakarta into a tight spot at odds with most of its Opec peers who were happy to be reaping petrodollar rewards after the lean 1990s.

But Subroto says that was no reason to leave the table.

"Opec did not think to oust Indonesia from Opec even though it is a net oil importer. There is no such thing in Opec's statutes," said Subroto.

"Opec wants a high oil price, while Indonesia wants a lower price. That is the reason for Indonesia's withdrawal."

Indonesia was "very respected in Opec", said Subroto, whose warnings in the 1990s about a potential supply crisis after 2000 due to the rise of China and other industrialising Asian nations were a decade ahead of their time.

"Indonesia showed its capabilities by bridging differences within Opec," said Subroto, who stood out among the sheikhs at Opec meetings, thanks in part to his bowtie habit, and who used his diplomatic skills to unite the often disparate views of ministers from the Arab Gulf, Iran, Africa, and Latin America.

"Indonesia brought them to an agreement in the past."

Those skills might have been useful yesterday, when Opec ministers in Vienna haggled into the early morning hours before agreeing to set production quotas that effectively cut output.

Still, at five hours the meeting was far briefer than the days-long affairs that marked the group in Subroto's era.

Subroto concedes it will be difficult to restore Indonesian output to its former glory.

Reuters