Angola, the second-largest OPEC producer in Africa, intends to maintain its oil production above 1 million barrels per day (bpd) following its departure from the organization, as revealed by the country’s Minister of Natural Resources. Angola’s decision to leave OPEC at the end of the previous year took many by surprise, citing misalignment with the organization’s values and interests.
Diamantino Azevedo, the Minister of Natural Resources, stated this week, as reported by Bloomberg, that OPEC’s assigned production quotas were challenging their actual capabilities and needs, leading to the formal decision to withdraw the country from the organization. According to the breakdown of individual production quotas, Angola’s assigned quota for this year is set at 1.11 million bpd, a reduction from the previous agreement in November, which allocated a quota of 1.28 million bpd.
This reduction, amounting to 170,000 bpd, contradicts Angola’s ambitions for oil production growth after a decade marked by depletion and underinvestment in new exploration. Ten years ago, Angola’s oil production stood at 1.8 million bpd, but due to various challenges, including depletion and underinvestment, it dipped below 1 million bpd last year. Recent data indicates production rates of 1.14 million bpd for October and 1.08 million bpd for November, reflecting a rebound.
In the midst of these developments, Equinor has deepened its commitment to Angola by purchasing stakes in two exploration blocks in the West African nation. The Norwegian major, already a significant investor in Angolan oil, expressed the need for new exploration to meet future energy needs. The exploration blocks will be operated in collaboration with BP and Eni.
Angola’s exit from OPEC was reportedly influenced by disagreements over the new 2024 quotas, particularly between Angola and Nigeria. Both countries expressed dissatisfaction with quotas that aimed to maintain or reduce current production levels, while they sought to boost production. Observers had earlier speculated about potential discord within OPEC, and Angola’s departure validated those concerns.
Analysts, including Helima Croft from RBC Capital Markets, noted that the seeds of Angola’s exit were planted in June when OPEC decided to establish a third party to determine a baseline for oil production. Additionally, Angola’s history of walkouts during OPEC meetings signaled a growing misalignment with the organization’s policies.
As Angola seeks to bolster its oil revenues to address fiscal challenges, the necessity for increased production becomes apparent. This, however, hinges on substantial investments, with international supermajors and potential Chinese investments emerging as pivotal players in the West African nation’s oil sector.