Angola: Leaving OPEC ‘won’t have major costs’ for country – economist

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Angola: Leaving OPEC ‘won’t have major costs’ for country – economist

9:58 CAT | 22 Dec 2023

Image: Bloomberg

The chief economist of the economic studies department at Banco Fomento Angola (BFA) told Lusa on Thursday that Angola’s departure from OPEC does not imply “relevant costs” and frees the country to increase oil production.

“There are no relevant costs in leaving because the power of the Organisation of Petroleum Exporting Countries (OPEC) to be completely decisive in the price is no longer the same as it used to be, so leaving only has the detriment of not taking part in the decision, but that’s all,” said José Miguel Cerdeira, speaking to Lusa following the government’s announcement today.

For the economist, Angola’s decision, taken in the wake of Angola’s public criticism of the limitation on increasing production to 1.11 million barrels per day during 2024, is ultimately positive for the Lusophone African country.

“It’s a very small cost for the advantage it gives the state and the operators, who have the certainty and peace of mind that they won’t have any problems if Angola exceeds its quota by several months next year,” explained José Miguel Cerdeira.

“The forecast in the General State Budget points to daily production of 1.06 million barrels, but our perspective is that this forecast is too pessimistic. We expect that in 2024 there will be months when production will be very close to or even above the quota of 1.11 million barrels a day set by OPEC,” he added.

The decision announced today by the minister of mineral resources, oil and gas, Diamantino de Azevedo, comes a few days after the president of Angola paid a visit to the United States, which publicly criticises OPEC’s policies, and in the context of US investments in the Lobito Corridor, and after several months in which Angola has defended an increase in its oil production, going against the interest of the largest producers in pushing up global prices.

“The exit provides stability and peace of mind so that exceeding this quota won’t be a problem for Angola,” concluded BFA’s chief economist.

The official information about leaving OPEC was passed on by the minister in charge on the sidelines of the tenth ordinary meeting of the Council of Ministers, chaired by Angolan President João Lourenço, who said that this was a government decision.

“We feel that at the moment Angola gains nothing by remaining in the organisation and, in defence of its interests, it has decided to leave,” Diamantino Pedro Azevedo said today, speaking to journalists at the Presidential Palace in Luanda, arguing that the decision “was not taken lightly” and considering that it makes no sense to be in an organisation whose results do not serve Angola’s interests.

At its meeting in early December, OPEC+ presented a target of 1,110,000 barrels per day, while Angola wanted to produce 70,000 more barrels.

According to statements by Angola’s governor at OPEC, during the meeting, Angola reaffirmed its position, but contrary to the unanimity that has been customary, OPEC decided on a quota that Angola does not agree with.

Source: Lusa