Indonesia courts Iran over oil supply amid talks to rejoin Opec

[JAKARTA] Indonesia is seeking a long-term crude oil supply deal with Iran if trade sanctions against the Persian Gulf nation are lifted, as it talks to Opec on rejoining the group.

The Organization of the Petroleum Exporting Countries will hold a meeting on Friday to discuss Indonesia's request to be a member, Energy and Mineral Resources Minister Sudirman Said said in a statement. Indonesia, a net oil importer, is also discussing crude supply and investments with the United Arab Emirates during meetings in Vienna, he said.

"The latest follow up is the possibility for PT Pertamina to enter the upstream business as operator or shareholder," Mr Said said, referring to Indonesia's state oil and gas company.

Indonesia is seeking to rejoin Opec seven years after rising reliance on imports prompted the nation to withdraw from the group supplying about 40 per cent of the world's oil. Its inclusion would help strengthen ties between producers and consumers, Mr Said said in interviews with Bloomberg on Thursday.

Indonesia joins European oil majors including Royal Dutch Shell Plc and BP Plc in declaring interest in Iran in anticipation of a possible end to sanctions against the Middle East producer over its nuclear program.

Iran reached an agreement with Indonesia last month to increase oil exports to Indonesia and plans to build a refinery, the Middle East nation's Fars news agency reported in May. Kreasindo Resources Indonesia signed a memorandum of understanding with Iranian company Nakhle Barani Paradis for long-term crude supply in February last year.

Iran sees the return of foreign firms as the key to reviving its oil industry. The government has circulated drafts of oil-contract terms, suggesting it's expecting to seal an atomic deal. Iran needs US$200 billion of investment in its oil industry, Oil Minister Bijan Namdar Zanganeh said last month.

Opec agreed to suspend Indonesia's membership in Sept 2008 at the country's own request, almost half a century after the nation joined. The country pumped 882,000 barrels a day of oil in 2013 and consumed almost twice as much, according to BP Plc.

Iran's Zanganeh said on Thursday he would welcome Indonesia's return to Opec, whose members are gathered in Vienna to discuss the 12-nation group's production policy.

The minister urged Opec this month to make room for more output from Iran when global sanctions recede. The group will keep its target of 30 million barrels a day unchanged at Friday's meeting, according to all but one of the 34 analysts and traders in a Bloomberg survey.

The government in Tehran says it can add almost 1 million barrels to daily production within six months of sanctions being lifted. Iran offered condensate and liquefied petroleum gas, the energy ministry said in the statement.

BLOOMBERG