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Updated December 26th, 2023 at 13:54 IST

Angola exits OPEC amid quota disagreement, paving way for increased Chinese investment

The recent agreement signed between China and Angola on enhanced cooperation adds weight to the possibility of increased Chinese investment in various sectors.

Sankunni K
Angola Exits OPEC Amidst Quota Disagreement, Paving the Way for Chinese Investment
Angola Exits OPEC Amidst Quota Disagreement, Paving the Way for Chinese Investment | Image:OPEC
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In a significant move, Angola has decided to withdraw from the Organisation of the Petroleum Exporting Countries (OPEC) due to a dispute over production quotas. The decision comes in the aftermath of OPEC's recent resolution to further cut oil output in the coming year, a move that did not align with Angola's national interests.

Minister of Mineral Resources and Petroleum, Diamantino Azevedo, emphasised that the decision was not made lightly, stating, "If we remained in OPEC, Angola would be forced to cut production, and this goes against our policy of avoiding decline and respecting contracts." Angola, a major oil exporter in Sub-Saharan Africa, expressed dissatisfaction with the production quotas, particularly as it seeks to increase production to secure essential foreign currency.

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The departure of Angola, the world's 17th largest oil producer, from OPEC has immediate global implications. Crude oil prices experienced a sudden drop following the announcement, reflecting anticipation of increased production by Angola's state-owned oil company, Sonangol.

Attributing the move to the politicisation of OPEC and its misalignment with Angola's developmental needs, experts suggest that this exit may open the door for enhanced Chinese investment in Angola's oil and other sectors. With oil constituting 90 per cent of Angola's exports, diversification efforts are crucial for the country's economic stability.

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China, a longstanding partner of Angola, stands to benefit from this development. The recent agreement signed between China and Angola on enhanced cooperation adds weight to the possibility of increased Chinese investment in various sectors. Angola, in its quest for economic diversification, seeks support in technology, a skilled workforce, and strategic partnerships. Chinese investment in sectors such as coffee, batteries, and solar energy is encouraged.

China's deepening ties with Angola align with its broader strategy in Africa. As part of its pitch to strengthen economic influence, China has offered tariff-free access to its massive consumer market for six countries, including Angola.

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While Angola's departure from OPEC has geopolitical and economic implications, it also reflects the changing dynamics of global energy alliances. The move has garnered attention and support from both the United States and China, showcasing an unusual convergence of interests in ensuring a stable and affordable energy supply.

Analysts anticipate that Angola's newfound flexibility outside OPEC's production constraints may pave the way for increased Chinese investment in its oil sector, contributing to the country's efforts to revitalise and diversify its economy. As the geopolitical landscape continues to evolve, the collaboration between Angola and its international partners, particularly China, is poised to play a crucial role in shaping the future trajectory of the nation's economic growth and energy landscape.

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Published December 25th, 2023 at 18:11 IST

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