Opec: time for new blood
OPEC may soon gain three new members – Angola, Ecuador and Sudan. This will give the cartel additional production to compensate for waning output from Indonesia, Iraq, Iran and Venezuela. But it may also end up further fragmenting an already fractured organisation. The accession of the three countries would help lift Opec's share of global production to 37% from 34%.
But expanding membership to 14 countries, including Iraq, would probably reduce the incentives for members to abide by their quota commitments. Of the three membership candidates, Angola would make the biggest contribution. The country's output is forecast nearly to double to around 2.8m barrels a day (b/d) in the next three years, as deep-water discoveries and new onshore frontiers open up.
Angola's cabinet voted in late November to join the organisation and government officials say this could happen as early as March. Yet the attractions of membership for Angola appear distinctly mixed. While it might gain a modicum of geopolitical influence, it would lose its freedom to push for maximum production. The foreign oil majors that have driven the west African country's oil expansion programme will be unhappy if Opec quota requirements affect their development programmes. The International Energy Agency has warned Angola that membership could slow down investment and the growth of global production capacity.
Sudan and Ecuador's much smaller volumes, at just over 0.5m b/d each, would leave them more marginal players within the cartel – although Sudan, isolated politically and under pressure over the actions of its militias in Darfur, would have more to gain through membership. ~
Opec, meanwhile, seems to believe that the long-term benefits of increased reserves and daily production outweigh the drawback of less cohesion. The three new members, none of which are individually powerful enough to threaten the existing balance of power within the organisation, fit Opec's bill.