Angola quit OPEC to sustain oil production above 1MMbpd, top official states
(Bloomberg) – Angola quit OPEC because its quota limits hindered the country’s plans to stabilize crude production above 1 MMbpd, according to the country’s top oil official.
The African nation’s December exit from OPEC came after the group imposed a much lower production limit. The tighter cap was too much for Angola, which is making efforts to boost investment after many years of underinvestment and production decline.
“This organization no longer aligns with Angola’s values and interests,” Mineral Resources Minister Diamantino Azevedo said in a speech in Luanda on Wednesday. After the imposition against the country’s wishes of “production quotas challenging our actual capabilities and needs, we made the formal decision to withdraw our country.”
Angola’s briefly dipped below 1 MMbpd last year, down from more than 1.8 MMbpd a decade earlier, according to data compiled by Bloomberg. Its national petroleum agency has launched investor roadshows and offered a series of licensing rounds to auction off blocks.
The oil ministry is committed to promoting investments that will maintain production above 1 MMbpd, Azevedo said.
Angola’s decision to exit the group will prove beneficial if it means the country can sustain activity in its oil industry, according to Robert Besseling, chief executive of Pangea-Risk, an advisory firm focusing on analysis of African economies.
“If Angola’s investment plans materialize and financing is assured, the country’s departure from OPEC will leave it in better stead,” he said. “The government desperately needs higher oil revenues to resolve fiscal pressures and buffer its depreciating local currency.”
Cracks in Angola’s 16-year membership in OPEC first started to show in June, when officials from the country abruptly exited a meeting of the group in Vienna after African members were put under pressure to reduce their quotas. After the country’s production limit was slashed to 1.11 MMbpd at the group’s November gathering, it vowed to ignore the restriction.
Angola’s current government is more aligned with the US and western oil companies, so a break from OPEC+, which is dominated by Russia and Saudi Arabia, fits into its strategic vision, Besseling said.
Lead image source: Chevron
