Indonesia pulls out of Opec

Purnomo Yusgiantoro told reporters it did not make sense for his oil-producing nation to be a member of the Organisation of Petroleum Exporting Countries at a time when domestic reserves were drying up and 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 cartel, but has had to import oil 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.

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 subsidises oil to protect the poor, last week raised the price of gasoline and other fuel products by nearly 30% 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% 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. Indonesia joined in 1962. The cartel presently has 13 members.