You might assume that all members of OPEC, a cartel that supplies nearly a third of the world's crude, would be a net oil exporter.

But unfortunately for Indonesia, this isn't the case.

According to BP Migas, an upstream oil and gas executing body in Indonesia, daily oil production is currently 200,000 barrels short of demand.

That's not good. . . . And it gets worse!

The future doesn't look much brighter. BP Migas is predicting consistent shortfalls up through 2009, when production shortages could push past half a million barrels!

Indonesia's oil crisis was underscored in October when Susilo Bambang Yudhoyono, Indonesia's president, made the following comments:

"Energy consumption will keep increasing and therefore we must think of preserving the energy for the 200 million population, which is estimated to grow to 250 million or 300 million in the next 10 years."

Since Indonesia began importing more oil than exporting, it has fallen into the category of a net oil importer.

And there seems to be no solution in sight.

The energy crisis is already slamming Indonesia's economy in three primary ways. The first effect is constricting the country's growth. Secondly, it's driving up inflation. And finally, it is disrupting the state budget.

So what does Indonesia need?

Simple . . . It's the same this the world needs . . . More giant oil fields.

BP Migas has announced that they are focusing their drilling efforts on 200 wells between now and 2009. Yet this option looks dismal to some.

Should most of these wells turn out dry, production will continue to fall short of demand and the crisis will progress even further.

Personally, I don't get too excited when experts make generalized statements, especially when it sounds more like a hand of blackjack than a definite solution.

Just listen to such a statement recently given by BP Migas: "We hope there are new fields. Otherwise, it will difficult to meet domestic energy needs, let alone export."

We hope?

So what went wrong?

Well, even if we put the energy crisis aside, there is still the major issue of oil depletion because Indonesia's older oil fields are experiencing a natural decline.

But there is also the considerable obstacle to develop new production fields. A little over a year ago, investors were very hesitant to explore deep off-shore oil because of a lot of red-tape laws created by the government. These regulatory hassles made some potential investors loath to entrust the huge amounts of capital needed for such projects.

Bottom line: It'll take a near miracle for Indonesia to become a net oil exporter again.

Time to Cut Loose?

Considering that the name "OPEC" implies some type of oil exportation, one must wonder what the future holds for Indonesia.

A few years ago, speculations arose about Indonesia's possible exit from OPEC, due mainly to diminishing oil production statistics.

But what would a departure mean for the ex-net oil exporting country?

Certainly the future of Indonesia's oil and gas industry would look grim, given that foreign investments tend to shy away from places with less potential value.

The reason is simple enough.

Losing status as an oil exporting country is pretty bad, but leaving OPEC (or being forced out, for that matter) would be a gigantic red flag for potential profit in the area.

Overall, this is a red flag for the entire world as well.

On Friday, Luke mentioned that OPEC's reign may one day be over because of "seriously aging oil fields leading to a peak in oil production and subsequent decline."

And it looks like Indonesia is the first to topple.

For oil investors, this means that the oil bull market is far from over.

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