'Sad moment': Angola quits OPEC following quota cut row

Angola, Africa's second-largest oil producer, is quitting OPEC "in defense of its interests," following a months-long dispute over its production quota, concluding its 16-year membership of the group.

The country's oil minister, Diamantino Azevedo, announced the withdrawal on Dec. 21 following a ministerial meeting chaired by Angolan president Joao Lourenco. It comes weeks after the country's 2024 quota was slashed by 350,000 b/d.

"Angola has always fulfilled its obligations and fought all the time to see OPEC modernize, help its members gain advantages. We feel that in this Angola currently gains nothing by remaining in the organization and, in defense of its interests, decided to leave," Azevedo said in a statement sent to S&P Global Commodity Insights.

"When we are in the organizations and our contributions, our ideas, do not produce any effect, the best thing is to withdraw," he said, adding that the departure was "not a thoughtless, untimely decision." Angola joined OPEC in 2006.

The withdrawal reduces the Saudi-led group – which has been trimming production to shore up oil prices – to 12 members but will have a limited market impact due to Angola's dwindling output.

"Angola's departure from OPEC does not impact oil market fundamentals – Angola will not produce more or less oil because of its departure in coming months," said Jim Burkhard, S&P Global's vice president of oil markets, energy and mobility. "It does remove an uncertainty – the future of OPEC production quotas – from the upstream investment equation."

Front-month ICE Brent futures fell 2% on the news, before bouncing off the session lows, with the benchmark trading at $78.45/b as of 14:30 GMT, down 1.68% from the previous close.

Quota row

At the last meeting of the OPEC+ alliance in November, which was delayed for days and then shifted online amid a row over African output targets, Angola's quota for 2024 was cut from 1.46 million b/d to 1.11 million b/d, below November production of 1.13 million b/d, according to the Platts OPEC Survey. As the talks dragged on, sources told S&P Global that Angola was the final holdout.

It was the culmination of a months-long dispute that began in June, when demands that Angola accept a lower quota to reflect its falling production capacity saw Azevedo storm out of the OPEC secretariat in Vienna.

The country was given a five-month grace period to demonstrate higher production capacity to two external consultancies and analysts from S&P Global to avert a quota cut, but ultimately failed to do so.

Like fellow African members Nigeria and the Republic of Congo – who also face 2024 quota cuts – Angola has consistently failed to hit its production targets in recent years, with underinvestment, a lack of exploration activity and technical issues fueling a production decline. Angolan production peaked at 1.9 million b/d in 2010.

November's quota cut nevertheless prompted an angry response from the country, which argued a lower target would prevent vital investment in its oil sector, a key source of government revenue.

Azevedo did not attend the meeting but continued to demand a 1.18 million b/d quota, writing in a letter to OPEC Secretary General Haitham al-Ghais, seen by S&P Global, that the decision "was not taken unanimously and is against Angola's position."

OPEC could not be reached for comment.

African influence

The departure of Angola reflects the continued collapse of African influence at OPEC.

The African continent previously held significant sway during the tenure of former secretary-general Mohamed Barkindo. However, the formation of OPEC+ with a Russia-led group and steady production declines have cost them.

It also undermines Ghais' efforts -- and those of current OPEC president Antonio Oburu Ondo, the oil minister of Equatorial Guinea -- to expand the group to secure greater market share at a time of significant volatility. In November, OPEC+ announced Brazil would join the alliance.

The remaining sub-Saharan African members of OPEC are Nigeria, the Republic of Congo, Equatorial Guinea and Gabon, while Sudan and South Sudan are OPEC+ members.

Representatives of other African countries said they were not leaving.

"It is a sad moment," said one African delegate. "It will push everyone to reflect and see how we can in the future improve the dialogue among us."

Angola is not the first country to leave OPEC in recent years. Indonesia quit in November 2016, followed by Qatar in January 2019 and Ecuador in January 2020.