Things have turned a full cycle. The policy of thinning the ranks of OPEC has turned sour. Gone are the days when some were itching to get out of organization on one pretext or the other. A new era, reminiscent of the growing clout of the oil group, is around the corner. New members are knocking at OPEC’s door.
“Fidel (Castro) is headed for OPEC,” a beaming Hugo Chavez, the recently re-elected nemesis of the United States, jokingly said in Havana while attending the nonaligned summit last September. “He is finding oil.”
Some then said finding oil in Cuba could solve most of Castro’s neighborhood problems. Not only the economic woes of Castro’s Cuba would be taken care of but “Big Brother” would also be forced to re-evaluate its policies on Cuba. There’s nothing like oil for getting the US to the negotiating table.
But Chavez was not merely kidding. To be fair, Cuba is still far from joining the exclusive club and by no means is on the verge of any ‘oil revolution’ but Chavez’s comments could not rightly be rejected, either.
A US Geological Survey report published last year estimated that 4.6 billion barrels of oil and 9.8 trillion cubic feet of natural gas could lie within the economic zone in the North Cuba Basin. This 112,000-square-km area has been divided into 59 exploration blocks and was opened to foreign companies in 1999. Recent deep-water studies in the Gulf of Mexico — divided into economic exclusion zones of the United States, Mexico and Cuba — have been promising.
Six companies have signed exploration deals for 16 blocks in the Gulf of Mexico. Norsk Hydro of Norway, Spain’s Repsol, India’s ONGC and the Chinese are already active in the area. Canada’s Sherrit International and Brazil state oil company Petrobras are also reportedly involved in exploration. Already a number of rigs can be seen operating in Cuba just 50 miles off Florida. This is a tempting pool indeed for the energy giants, and just off the shore of the world’s largest energy consumer.
Though the prospect of Cuba getting into OPEC could still be a far-fetched idea, some others are already knocking at the doors of the organization. And the knock is fairly audible by now. Angola, Sudan and Ecuador have expressed their intention to bid for an entry into the oil grouping — signaling the virtual end of the policy of the industrial world to somehow loosen and lessen OPEC’s control on oil and energy markets.
The three countries, if and when admitted into OPEC, would boost the cartel’s overall output by two million barrels a day, or by six percent, and bring 10.5 billion barrels of additional proven reserves to the club.
Angola, sub-Saharan Africa’s second-biggest oil producer, is gradually emerging from a 27-year civil war. An Oil Ministry spokesman in Luanda said last week that Angola planned to join OPEC in March. With the help of foreign investment, Angola’s oil production is expected to rise to two million barrels a day next year.
“Angola is joining because revenues are rising so spectacularly fast at the moment that it gives it more influence on the world stage,” said Nick Shaxson, Angola head at the UK-based Chatham House think-tank.
A move into OPEC by Angola would not go down well in Washington, the biggest importer of Angola’s oil. US groups Chevron and ExxonMobil, the biggest investors in Angola’s oil sector, are likely to be equally wary.
Sudan is the region’s third-biggest producer. In Khartoum, an Oil Ministry official was quoted as saying that Sudan was waiting for President Omar Bashir to approve a move to join OPEC. Sudan currently pumps about 330,000 barrels a day and with the ongoing activities in the country the figure is expected to go up considerably in near future.
Some say that Sudan is already on the verge of an oil boom. Sudan today is the Saudi Arabia of mid to late 70’s, an analyst recently told this correspondent on return from Khartoum, in relation to Sudan’s ongoing infrastructure development work. All this development work in Sudan today is possible only because of oil revenue. With Sudan under fire for the conflict in Darfur, joining OPEC could give it considerable leverage in its confrontation with the United Nations over atrocities and its refusal to continue to allow a UN or AU presence in the country.
Ecuador is the third country planning entry into the OPEC. Ecuador’s newly elected leftist President Rafael Correa has already signaled his willingness to follow Venezuela in negotiating more advantageous deals with foreign oil groups. Ecuador, with oil output of about 270,000 barrels a day, announced last week that it may rejoin the group, which it left in 1992.
Joining OPEC would raise the standing of all the three countries. It is a smart, calculated move on the part of three countries, some argue.
“Suddenly these countries are seeing oil as a means of increasing the volume of their voice on the international stage. It’s a response to high oil prices and the rise of oil up the international political agenda,” Julian Lee, analyst at the London-based Center for Global Energy Studies was quoted as commenting on the bid of the three countries to get into the oil producers grouping.
OPEC, founded in 1960, had 13 members initially until Ecuador and Gabon, unwilling to stump up membership fees, dropped out in the 90s. It currently has 11 members: Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela and Iraq.
Whether one likes it or not, OPEC is growing in stature and clout.