Meesa Back!! Indonesia to Rejoin OPEC

The once and future export industry of Indonesia?

This news item has to be one of the odder ones in a truly weird year: Having left the Organization of Petroleum Exporting Countries (OPEC) in 2008 because it had since turned into a net oil importer, Indonesia now wishes to rejoin OPEC. Has it become a net oil exporter once again? Well, no. So, it's odd that Indonesia would want to rejoin a group whose interests are opposite its own as a net importer. That is, why get together again with a cartel expressly formed to raise oil prices...when you're a net oil importer? On the face of it, it's not a welfare-enhancing move on Indonesia's part.

Go figure:

Indonesia is reactivating its membership of the Organization of the Petroleum Exporting Countries in December, OPEC said on Tuesday, which would add almost 3 percent to the group's oil output already close to a record high.

The southeast Asian country would be the fourth-smallest producer in the Organization of the Petroleum Exporting Countries ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.

Indonesia was the only Asian OPEC member for nearly 50 years before leaving the group at the start of 2009 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer.

In a statement, OPEC said Indonesia's request to reactivate its full membership was circulated to OPEC members and following their feedback, OPEC's next meeting on Dec. 4 will include the formalities of reactivating its membership.

Aside from lacking apparent self-interest in rejoining OPEC, Indonesia does not strictly meet the qualifications for being an OPEC member anymore:

Indonesia's status as a net importer had raised the question of whether it would return as a full member given that OPEC's Statute says any country with a "substantial net export of crude petroleum" may become a full member.  

It's baffling, to say the least, but there must be some underlying motive here that makes more sense that isn't apparent (yet). The FT, for instance, suggests that Indonesia is keen on re-building contacts with those who can help it revive its dwindling production in the near future.