OPEC on recruitment drive for new members to boost market power

OPEC is actively seeking new members, Secretary General Haitham al-Ghais said July 5, as the oil producer bloc wishes to expand its clout in the market.

Ghais said he has recently visited Malaysia, Brunei, Azerbaijan and Mexico – which have cooperated with OPEC members on a series of production cuts since 2017 in an alliance known as OPEC+.

While he declined to say whether actual invitations to join OPEC had been extended to those countries, he said he had held discussions about furthering their ties with potential formal membership.

"I am," he said, when asked by reporters on the sidelines of the OPEC International Seminar in Vienna if he was trying to recruit new members.

Of the countries he cited, he said: "Our cooperation with all these countries is ongoing. Many of the countries, if not all of them, already feel that they are part of OPEC."

OPEC and 10 other producers, led by Russia, formed the OPEC+ alliance to reverse a three-year slump in prices and have continued to coordinate on production quotas through the pandemic, save a one-month price war that broke out in April 2020.

Together, they control almost half of global crude oil production capacity, though sanctions on Russia, Iran and Venezuela have significantly crimped the group's output, along with a lack of investment in many other members.

According to OPEC's charter, membership is open to net crude exporters.

Malaysia, Brunei and Azerbaijan are relative minnows in terms of production. Azerbaijan pumped 500,000 b/d in May, according to the latest Platts OPEC+ survey by S&P Global Commodity Insights, Malaysia produced 380,000 b/d and Brunei had 70,000 b/d.

Mexico is much larger, producing about 1.7 million b/d, though it has not participated in OPEC+ production quotas since 2020.

The OPEC+ alliance as a whole pumped 41.33 million b/d in May, according to the Platts survey.

Do more with more

Several OPEC ministers told the seminar that they were in favor of more countries joining.

Hitting out at speculators who have bet on falling oil prices, UAE energy minister Suhail al-Mazrouei said the OPEC+ group, which reports production figures and other statistical information to the OPEC secretariat, has at its disposal data that is "much more accurate than anyone."

He added, however, that OPEC+ could provide even more certainty to the market if it expanded its membership, and therefore its market share.

"I would invite other countries to join. Imagine if we were 60%, 70% [market share]. We would definitely do a better job," he said on a panel.

His comments were echoed by Antonio Oburu Ondo, the minister of mines and hydrocarbons of Equatorial Guinea, who currently holds OPEC's rotating presidency.

"If we are a larger group we can definitely impact better on transparency and certainty," Ondo told the seminar. "The bigger the organization is, the better it is going to be, because we can make sure there is more certainty in the market and that will automatically translate into certainty in the way we manage our economies."

Parviz Shahbazov, Azerbaijan's energy minister, was not asked about joining OPEC but said of OPEC+: "The bigger we are the more we can do."

"If we did not have [OPEC+], we would need to create it immediately and expand it, beyond not only oil but into the energy sectors as a whole because we are in a transition time and we need to think broadly," Shahbazov added.

Emerging producers

Namibia, where a trio of vast oil discoveries were made recently, has said it hopes to join OPEC once production starts in its red-hot Orange Basin, which is thought to contain billions of barrels of crude.

Guyana, an emerging producer in South America, was invited to join the proceedings at the OPEC seminar but has not been formally asked to become a member, Ghais said, refuting recent media reports that such an approach had been made.

"I will be very transparent if there is anything actually that we're going to develop," he said of his recruitment drive. "If we're going to invite any country to become a formal member, we will not hide it."

The last country to join OPEC was the Republic of Congo in 2018, part of an expansion of African membership, with Equatorial Guinea in 2017 and Gabon rejoining the organization in 2016.

However, Ecuador quit OPEC in 2019, Qatar in 2018 and Indonesia in 2016.