Yahoo Finance Angola’s Rising Oil Exports Validate Decision to Quit OPEC
(Bloomberg) -- Angola is set to export the most oil in almost four years in August, demonstrating why the country decided to leave OPEC.
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Shipments will jump to 1.23 million barrels a day, loading plans show. The Organization of Petroleum Exporting Countries had tried to set a production limit of 1.1 million a day on Luanda, prompting Angola to depart the group. Output is not directly tied to monthly exports.
“They have a very clear mandate to grow production in Angola,” said Paul McDade, chief executive officer of Afentra Plc, which holds licenses there and plans to boost output. The government “wants to see the country grow up from 1.1 million barrels a day,” he said in an interview earlier this month.
Angola decided to quit OPEC in December because the production threshold — set by the group after an external review of the nation’s capacity — was to be 400,000 barrels a day lower than a prior limit. That would have entrenched output restrictions and made it harder to go higher.
“Leaving OPEC has opened further opportunities for investment into the oil and gas sector,” said Robert Besseling, CEO of advisory firm Pangea-Risk. It means the US and China are now vying to become Luanda’s favored economic partner, he said.
The government has encouraged exploration companies — including Afentra — to invest more by granting them license extensions and favorable fiscal terms, McDade said.
The producers running Angola’s fields have invested heavily in expansion and reservoir management to counter dwindling production, according to Energy Aspects. August’s export flows also reflect the deferral of two cargoes that were meant to be shipped in July, said Dylan Hattingh, an analyst at the researcher.
Even without those adjustments, exports would still be the highest since last July and above OPEC’s proposed lower limit, the loading plans show.
“The recent stabilization in production is likely the result of incremental field work and infill drilling undertaken over the past few years,” Hattingh said. “Investment in offshore assets remains robust, and we anticipate this trend will continue under the management of experienced operators.”
--With assistance from Julian Lee.
(Updates with analyst comment in fifth paragraph.)
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