AngolaMaking the news

Angola Withdraws from OPEC Amidst Quota Disputes

5 Mins read

Angola – a significant player in Africa’s petroleum landscape – has announced its decision to exit the Organization of the Petroleum Exporting Countries (OPEC). For Angola, membership status is not the sole concern but OPEC must necessarily serve its business interest. If its leaves the OPEC with effect from Jan. 2024, Angola will be the third after Ecuador that exited in 2020 and Qatar in 2019. Several reports indicated that Angola is bidding goodbye to the organization after serious clashes with Saudi Arabia. Reports pointed to the fact that Saudi Arabia has largely failed to keep abreast with significant corporate, financial and political developments around the world.


Angola’s exit follows OPEC+’s decision to set lower production quotas for both Angola and Nigeria last June. Its output currently hovers around 1.1 million barrels per day, it has however strategic plans to raise this figure in the coming years. The decision was made at a cabinet meeting led by President Joao Lourenco, the state-owned Jornal de Angola reported. The information was provided to the press by the Minister of Mineral Resources, Oil and Gas, Diamantino Azevedo, in the middle of the 10th Ordinary Meeting of the Council of Ministers, chaired by the President of the Republic, João Lourenço.


“We don’t want to be in organizations to enter mute and leave silent, but rather to be active and make contributions”, highlighted Minister Diamantino Azevedo, for whom, when this does not happen, it is negative. “When we see that our contributions do not lead to any tangible results, then we are not doing anything in this organization,” he said.


Angola, which is Africa’s second-largest producer after Nigeria, was given a lower crude oil production quota for next year by the wider OPEC+ alliance, which includes 10 other countries led by Russia. Both Nigeria and Angola had underperformed and failed to pump to their quotas for years, due to a lack of investment in new fields and maturing older oilfields.


“We will produce above the quota determined by OPEC,” Angola’s OPEC governor Estevao Pedro said in an interview previously. “It is not a matter of disobeying OPEC; we presented our position, and OPEC should take it into consideration.”


Angola no longer sees OPEC membership as beneficial anymore after intense disputes over production quotas. It wanted to produce over the 1.18 million barrels of crude oil per day given to it by the group as it aims to achieve energy security and drive gross domestic product growth on the back of optimal production, exploitation, and monetization of its oil resources.
Financial Times said in its report that the decision was taken after the producer group lowered Angola’s oil output target last month as part of a series of cuts led by Saudi Arabia to help prop up prices. Brent, the international crude oil benchmark, fell 1.8 per cent to $78.26 a barrel on Thursday while the US benchmark, West Texas Intermediate, dropped 2.1 per cent to $72.69 a barrel.


Financial Times made reference to Bjarne Schieldrop, chief commodities analyst at SEB, who cautioned against seeing Angola’s departure as a sign of a bigger problem with the group. “It will always be used by those who are bearish on oil as an excuse to sell oil,” he said. “What really matters is Russia and Saudi Arabia. This is not a signal that the rest of Opec is falling apart.”


Angola has been battling to turn around declining production for nearly a decade. The decision, announced by oil minister Diamantino de Azevedo was taken at a cabinet meeting and approved by President João Lourenço, the state media agency reported on Thursday.


That however, Alex Vines, head of the Africa programme at the Chatham House think-tank, said Angola had pursued an increasingly “à la carte foreign policy” under Lourenço, who became president in 2017, “and leaving OPEC is part of that”.
Although the country has historic links with the Soviet Union, it has been more prepared to criticise Russia’s invasion of Ukraine than other African countries. Luanda had become disgruntled with the direction taken by OPEC, usually set by Saudi Arabia and Russia, and the lack of attention paid to the views of smaller producers such as itself, analysts said.
Ricardo Soares de Oliveira, an Oxford university professor of African politics, said Angola had grown closer to the US under Lourenço, though he did not see how leaving Opec would automatically serve Washington’s interests.


President Joe Biden played host to Lourenço last month and the US has committed to investing more than $1bn in the country, including $900mn in a solar project aimed at helping accelerate its diversification away from oil.
History informs that Angola, which joined OPEC in 2007, holds untapped oil and gas resources estimated at 9 billion barrels of proven crude oil reserves and 11 trillion cubic feet of proven natural gas reserves. Now, Angola leaves OPEC due to disputes over given quota as it was with Indonesia in 2016, Qatar in 2019, and Ecuador in 2020.


“There’s a very clear rapprochement between the US and Angola. But you can be a pro-west, global south player and still stay in Opec,” Oliveira said. “Going all the way in a pro-western direction would be quite atypical for African states that are threading the needle carefully, unless they’ve struck some grand bargain with the Americans.”


The latest developments within OPEC includes – in July 2021, OPEC+ member United Arab Emirates rejected a Saudi proposed eight-month extension to oil output curbs which was in place due to COVID-19 and lower oil consumption. Then in 2021, the record-high energy prices were driven by a global surge in demand as the world quit the economic recession caused by COVID-19, particularly due to strong energy demand in Asia.


Russia’s invasion of Ukraine in February 2022 has altered the global oil trade. EU leaders tried to ban the majority of Russian crude imports, but even prior to the official action imports to Northwest Europe were down. More Russian oil is now heading to nations including India and China.


In October 2022, OPEC+ led by Saudi Arabia announced a large cut to its oil output target in order to aid Russia after previously producing lots of cheap oil to aid the US. In response, US President Joe Biden vowed “consequences” and said the US government would “re-evaluate” the longstanding U.S. relationship with Saudi Arabia. Robert Menendez, the Democratic chairman of the U.S. Senate Foreign Relations Committee, called for a freeze on cooperation with and arms sales to Saudi Arabia, accusing the kingdom of helping Russia underwrite its war with Ukraine.


The President of the Republic, João Lourenço, has just returned from the United States. Angola is a founding member state of the Community of Portuguese Language Countries (CPLP), also known as the Lusophone Commonwealth, an international organization and political association of Lusophone nations across four continents, where Portuguese is an official language. Angola is a member of the Southern African Development Community (SADC).


As one of the fastest-growing in Africa after South Africa, Nigeria and Egypt, it has an estimated population of 36 million in 2023. Angola is the world’s twenty-fourth largest country – comparable in size to Mali, or twice the size of France or of Texas. It has a favorable coastline for maritime trade with four natural harbors: Luanda, Lobito, Mocamedes, and Porto Alexandre. These natural indentations contrast with Africa’s typical coastline of rocky cliffs and deep bays. Angola’s capital, Luanda, lies on the Atlantic coast in the northwest of the country.


Angola initially joined OPEC in 2007 in an effort to collaborate with other oil-producing nations. Both Angola and Nigeria have consistently ranked among the top oil producers in Africa. After 16 years of membership, Angola is set to leave the Organization of the Petroleum Exporting Countries (OPEC) which is an international body that manages matters related to global petroleum policy. It was founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela).

Related posts
Making the newsTechnology

Herbert Wigwe's Journey from Incubating Flutterwave to Backing SystemSpecs, BVN

4 Mins read
Herbert Wigwe’s Journey from Incubating Flutterwave to Backing SystemSpecs, BVN Since the death of Herbert Wigwe, the founding Group CEO of Access…
Making the newsTravel NewsUncategorized

The Implications of Falling Visa Restrictions for Africans

1 Mins read
The Implications of Falling Visa Restrictions for Africans Visa-free travel is on the rise in Africa, with Malawi the latest country to…
AfricaFinanceMaking the news

4 Billionaires Who Surpass the GDP of Two African Nations

2 Mins read
4 Billionaires Who Surpass the GDP of Two African Nations At the forefront of Nigeria’s economic transformation are four prominent billionaires, Aliko…

Leave a Reply

Your email address will not be published. Required fields are marked *