Luanda, ANGOLA – In a significant move, Angola has declared its exit from the Organization of the Petroleum Exporting Countries (OPEC), effective from January 1, 2024.
This decision follows similar exits by Ecuador in 2020 and Qatar in 2019, marking a notable shift in the dynamics of the global oil market.
Angola, a member of OPEC since 2007, currently produces approximately 1.1 million barrels per day, contributing to the group's total output of 28 million bpd.
With Angola's departure, OPEC will be left with 12 members, producing around 27 million bpd, constituting 27% of the global oil market, which stands at 102 million bpd.
OPEC, founded in 1960, has changed in recent years, collaborating with non-members, including Russia, under the OPEC+ framework to manage market dynamics.
However, challenges such as production cuts and increased output from non-OPEC nations, particularly the United States, have impacted the organization's market share, which stood at 34% in 2010.
Angola's recent struggles to meet its OPEC+ output quota due to declining investment further strained its relationship with the organization.
For 2024, OPEC+ lowered Angola's oil output target to 1.11 million bpd, a move that was met with disagreement from Angola, prompting a formal protest to OPEC.
Notably, other nations with relatively smaller oil outputs, including Qatar in 2019 and Ecuador in 2020, have also left OPEC, signalling shifts in strategic priorities.
On the flip side, some smaller producers have joined OPEC in recent years, such as Equatorial Guinea in 2017, Gabon in 2016, and Congo in 2018.
Nigeria, Congo reaffirm commitment to OPEC
While Angola distances itself from OPEC, Nigeria and Congo have reaffirmed their commitment to the organization.
Nigeria, Africa's largest oil producer, expressed unwavering dedication to OPEC's objectives, despite being given a lower output target for 2024. Congo, a full OPEC member since 2018, echoed its commitment to collaborate with member countries, emphasizing stability in the oil market.
China's Role in Angola's departure
Angola's decision to leave OPEC has potential implications for its relationship with China. The move, effective from January 1, 2024, coincides with an agreement signed between Angola and China for enhanced cooperation.
With oil constituting 90% of Angola's exports, the country seeks to diversify its economy and attract Chinese investment in non-oil sectors like coffee, batteries, and solar energy.
China's vested interest in Angola's economic overhaul is evident, given the substantial debt owed by Luanda to Chinese creditors, amounting to just under $21 billion. Angola's departure from OPEC could provide China with increased influence in the country's oil sector, allowing for greater investment to boost production.
As Angola aims to diversify its revenue sources and reduce dependence on oil, Chinese investment becomes crucial.
While environmental campaigners welcome the move as a step toward a green transition, the economic viability of renewable energy compared to oil and gas remains a challenge.
Despite a recent COP28 U.N. climate deal falling short of advocating for a fossil fuel phase-out, China continues to deepen its ties with African nations.
In a bid to expand economic influence, China will offer tariff-free access to its consumer market on 98% of imported goods for six African countries, including Angola, starting December 25, 2023.
