US dependence on the Organisation of Petroleum Exporting Countries for its oil imports has risen to its highest level in 15 years, following Angola’s arrival this week as the 12th member of the oil producers’ group.
Angola’s entry was agreed at the Opec meeting in Abuja, Nigeria, last month, and was formalised on Monday. The African country is the first new member to join the oil cartel since 1975.
The move comes at a time when Opec is trying to exert more influence, as seen in its decision at the December meeting to cut 500,000 barrels a day from its output from February.
Including Angola, Opec now supplies more than 54 per cent of the oil imports of the developed countries, its highest level for five years. For the US, the increase is even sharper: at more than 52 per cent, Opec’s share of US oil imports is at its highest since 1992.
Angola is particularly significant because it is one of the fastest-growing producers. Reasonable projections suggested it would have provided about a quarter of the total increase in non-Opec oil production this year.
Important new fields developed by Total of France, Chevron and Exxon Mobil of the US, and BP of the UK are either just coming on stream or are expected to begin producing in the next couple of years. That is helping to lift Angola’s production from about 1.45m b/d towards the end of last year to an expected 2m b/d by the end of this year. The World Bank expects production to peak at 2.6m b/d in 2011 – more than the current output of Nigeria, Africa’s biggest producer.
However, Angola’s entry into Opec is unlikely to have much impact on the price of oil. It has yet to agree a production limit with the group, and Opec officials have suggested that its planned production increase is likely to be accommodated by the group. As a result, the global balance of supply and demand is not expected to change. As one Opec official put it: “It is just a question of moving Angola’s production from one column into the other.”
Edward Morse, chief energy economist of Lehman Brothers, suggested Angola’s entry could cause problems for the group.
“For Opec it implies greater overall market share for the producer group, but at the cost of uncertainty over Angola’s eventual compliance with a quota that has as yet to be assigned. It certainly makes Saudi efforts to control the group’s overall production more tenuous.”
Mr Morse added that maintaining discipline could be more difficult because Angola had a record of paying “lip service only” to production agreements.
That assessment was echoed by Rafael Morais, an Angolan freelance journalist, who suggested that the government could want to join Opec for “a kind of cartel’s protection, leverage and a sort of club’s prestige” while not necessarily wanting to abide by all its rules.
He said: “It can join Opec and still produce as much as it wants and sell at pleasure through non-transparent channels. It’s like having the cake and eating it too.”
