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Angola Quits OPEC Amid Production Quota Dispute – Bloomberg (video)

Watch video: Luanda had rejected lower output cap imposed by group leaders. Role in organization ‘was not deemed relevant,’ minister says (Bloomberg)

Candido Mendes and Grant Smith, Bloomberg News

LUANDA/LONDON
EnergiesNet.com 12 22 2023

Angola announced it’s leaving OPEC following 16 years of membership amid a dispute over oil production quotas, while the cartel tries to buoy global prices.

Luanda had rejected a reduced output limit imposed by the leaders of the cartel to reflect the country’s dwindling capacity. The decision to leave is not entirely unexpected given the infighting in recent months, and while it may stoke concern about the group’s cohesion, it won’t affect the outlook for production.

There’s “no impact on supply forecasts as Angola is already producing at full capacity rather than limiting output due to OPEC+ quotas,” said Richard Bronze, head of geopolitics at consultant Energy Aspects Ltd. It “doesn’t directly impact quotas or production plans for other OPEC+ countries.”

Angola’s move will shrink membership of the Organization of Petroleum Exporting Countries to 12 nations. Led by Saudi Arabia, the group and its allies have been reining in supplies to shore up flagging prices. Brent futures slipped 1.5 per cent to trade below US$79 a barrel as traders reacted to cracks in OPEC’s unity.

“Our role in the organization was not deemed relevant,” Angola’s Mineral Resources Minister Diamantino Azevedo said after a cabinet meeting. “It was not a decision made lightly — the time has come.”

The country’s clash with OPEC’s leadership emerged in June, when a deal that awarded a higher production target to the United Arab Emirates forced Luanda to accept a reduced limit for 2024 that recognized its fading abilities. 

The nation’s output has collapsed about 40 per cent over the past eight years to around 1.14 million barrels a day as it fails to invest sufficiently in aging, deepwater oil fields, Bloomberg data shows.

MEETING DELAY

The dispute escalated last month, forcing OPEC to delay its ministerial meeting by four days.

Angola was promised a review by external consultants, but this produced an even worse outcome for the country: OPEC imposed an even lower quota of 1.1 million barrels a day, below current output.

Shortly after the Nov. 30 meeting concluded, Angola’s liaison to the organization, Estevao Pedro, told Bloomberg that the country rejected the new quota and would continue to pump as much as possible.

The notice on Thursday, first reported by state-owned Jornal de Angola, shows the West African nation’s patience has finally run out.

“As a country, when we participate, it is to contribute, expecting results that align with our interests,” Azevedo said. “When this doesn’t occur, we become redundant, and it no longer makes sense for us to remain in the organization.”

OPEC, headquartered in Vienna, didn’t immediately comment.

At the same time as supply from the organization has dropped, production from non-OPEC nations such as the U.S. has surged, hampering the group’s efforts to support prices. 

Crude’s deepening slump signaled some concern about group cohesion and the prospect of departures. Several other members have quit the group in recent years, for different reasons: Qatar, Indonesia and most recently, Ecuador.

bloomberg.com 12 21 2023

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