Indonesia Says ‘Goodbye OPEC, Hello Peak Oil’
Jun 4th, 2008 | By Doug Casey | Category: Emerging MarketsLast week, Indonesia’s Minister of Energy and Mineral Resources, Purnomo Yusgiantoro, announced that his nation would not renew its OPEC membership.
Indonesia no longer has the ”E” to stay in OPEC (Organization of Petroleum Exporting Countries). It had been a net importer of oil since 2004.
Casey Research’s Energy Division attended the recent oil and gas show in Jakarta, and it’s plain to see where the new oil demand is coming from. Greater Jakarta, Indonesia’s capital, hosts 23 million people, and while ten years ago the majority of them rode bicycles, now nearly everyone has a new 2-stroke Honda motorbike. Those who were riding motorbikes are now driving cars. (And those who were driving cars have moved to Australia to escape the smog.) In this light, it’s not surprising that Indonesia’s oil consumption has more than doubled since 1990.
As to their slumping oil production, it is no doubt partially due to a lack of reinvestment. Foreign oil companies are tired of paying 85% of their revenue into government coffers, and are looking to areas of the world where the fiscal regime is not as severe.
The main problem, however, is an extremely common one. Indonesia has exploited its fattest hydrocarbon targets, and the remaining exploration sites cannot make up for the decline from its existing oil fields. There’s certainly plenty of oil left to be found in Indonesia’s archipelago, but it’s equally certain that they’ll never regain their peak production rates of 1.6 million barrels per day.
Source: Indonesia Says ‘Goodbye OPEC, Hello Peak Oil’
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.