Angola has recently declared its intention to exit the Organization of the Petroleum Exporting Countries (OPEC) effective January 1, 2024. This decision follows similar moves by Ecuador in 2020 and Qatar in 2019, signaling a notable shift in the global oil industry landscape.
The departure of Angola from OPEC will reduce the organization’s membership to 12 countries, impacting its crude oil production, currently at around 27 million barrels per day (bpd), representing 27% of the world’s oil market. For Angola, this exit presents both challenges and opportunities.
Angola’s association with OPEC dates back to 2007, when it joined the organization with the goal of coordinating and regulating oil production for price stabilization and ensuring a steady income for member nations. Angola’s oil production, approximately 1.1 million bpd, has played a crucial role in contributing to OPEC’s collective output, making it the second-largest oil producer in Africa after Nigeria.
The decision to withdraw in 2024 stems from a prolonged disagreement over production quotas. Challenges in meeting OPEC+ output targets, coupled with internal issues affecting investments in the oil sector, have hindered Angola’s compliance with the organization’s production agreements. In the latest OPEC+ meeting in November, Angola’s 2024 quota was reduced from 1.46 million bpd to 1.11 million bpd, falling below its November production of 1.13 million bpd.
The Minister of Mineral Resources, Oil, and Gas, Diamantino Azevedo, justified the exit, citing the organization’s lack of modernization and stating that Angola gains nothing by remaining in OPEC. The move reflects Angola’s commitment to its interests and a desire for a more flexible approach to its oil industry strategy.
Angola’s departure is expected to worsen OPEC’s declining share, which stood at 34% in 2010, highlighting broader challenges for the organization. Internal challenges, decisions to cut production, and the rise of non-OPEC output, particularly from the United States and Brazil, have eroded OPEC’s market share. Angola’s exit further threatens to diminish OPEC’s effectiveness in regulating oil markets and stabilizing prices.
For Angola, however, the departure represents a strategic shift in its national oil industry strategy, aligning with global alliances and broader geopolitical interests. The move has garnered support from the U.S. and China, signaling potential opportunities for Angola. It frees Angola from OPEC constraints, allowing both the U.S. and China to potentially expand their roles in the Angolan oil sector.
While not impacting current oil production, the decision removes uncertainty surrounding OPEC quotas, providing a clearer investment landscape. Angola’s exit signifies a significant development in Africa’s evolving oil dynamics and aligns with its national strategy to become a regional petroleum supplier.
To succeed post-OPEC, Angola can draw insights from countries like Qatar and Ecuador, which exited the organization. Prioritizing investments in gas alongside oil production, as seen in ongoing projects like the Chevron-led Angola LNG development, can boost job creation and meet regional demand while aligning with global environmental trends.
Developing renewable energy sources, fostering ties with non-OPEC nations, and capitalizing on unique resources will allow Angola to navigate an independent path. Seizing opportunities in upstream investments, cross-border infrastructure projects, and downstream developments will contribute to global sustainability goals.
The Angola Oil & Gas 2024 Conference & Exhibition, returning to Luanda for its fifth edition, will be a crucial platform for exploring and capitalizing on these opportunities. Learn more about the event at https://angolaoilandgas.com/aog-2024-inquire-form/.
