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Indonesia is important to world energy markets because of its OPEC membership and substantial, but diminishing, oil production. Indonesia also is the world's largest liquefied natural gas (LNG) exporter. General Background Indonesia is arguably the country hit hardest by the Asian financial and economic crisis, with a decline in the economy of 13.7% in 1998 (Birol, 1999, p. 143). The economic crisis and the resulting IMF adjustment program have given an impetus to energy market liberalization and subsidy removal. First steps to remove the subsidies on kerosene and diesel oil, however, met with widespread protests and have been partly withdrawn. Apart from its recent economic crisis, Indonesia has experienced political turmoil as well over the past year, which has had some impacts on the country's energy sector. Following a referendum in August 1999 in which the majority of voters in East Timor chose independence from Indonesia, violence erupted, leading to the introduction of a multinational peacekeeping force to oversee the transition. Among other things, East Timorese independence calls into question the Timor Gap Treaty, under which Indonesia and Australia had agreed to split revenues from oil and gas development in the