Why tiny Sub-Saharan oil producers want to join OPEC
Last week was the 58th anniversary of OPEC. When it was created on Sept. 14, 1960, OPEC had five founder members — Saudi Arabia, Kuwait, Iraq, Venezuela and Iran.
The organization has had 15 members since the Republic of the Congo joined during its 174th meeting in June. Great interest in OPEC has been shown by Sub-Saharan nations. Gabon rejoined OPEC in July 2016, 21 years after leaving the organization. In May 2017, Equatorial Guinea became the 14th OPEC member. That means that six of OPEC’s 15 members are from Sub-Saharan Africa.
Other Sub-Saharan countries such as Chad, Sudan and Uganda might be considering OPEC membership — even though they are not exporting oil currently. If they were all to join, OPEC would have 18 members, with nearly half of them from Sub-Saharan Africa.
The OPEC Statute distinguishes between the original five founder members and the other full members. The five founder members and three quarters of the full members need to approve a country’s bid to join OPEC. The small producers from Sub-Saharan Africa would at best slightly increase OPEC’s total oil production. So while they will not add to OPEC’s role in balancing the market, it would be an excellent move for the small producers to attract foreign upstream investment to their nations and bolster their economies.
It would be an excellent move for the small producers to attract foreign upstream investment to their nations and bolster their economies
Equatorial Guinea has the smallest footprint in terms of oil production of all OPEC members, with output of around 130,000 barrels per day. Gabon’s production does not exceed 200,000 barrels per day. The Republic of the Congo produces around 300,000 barrels per day. In other words, adding these new Sub-Saharan producers would result in a total output of around 630,000 barrels per day.
This total volume is close to that of OPEC’s smallest members, in terms of production, prior to Equatorial Guinea and the Republic of the Congo, joining.
As the sub-Saharan African producers are small in terms of total production they are keen to join OPEC so that they can boost their future oil output. Their goal in joining is to attract foreign upstream investment. The Republic of the Congo said it wanted to join OPEC so that it could increase production to 350,000 barrels per day.
Adding several small members will not dramatically increase OPEC’s market share, but it will help these nations to support their economies and reduce their debts. OPEC membership will also boost these nations’ international profiles, something they would struggle to do without such a high-profile international organization.
- Faisal Mrza is an energy and oil marketing adviser. Twitter: @faisalmrza