OPEC+ woos African producers in bid for greater market share

With Africa one of the last frontiers for upstream development, the OPEC+ alliance is courting emerging oil producers on the continent, such as Namibia, Ghana and Senegal, for potential membership.

Rising output from the US, Canada, Guyana and other non-OPEC+ producers has continued to eat at the alliance's market share, while sanctions on Russia, Iran and Venezuela, as well as underinvestment by many other members, have put dampeners on its growth.

OPEC+ sees Africa as fertile ground for new members who would give it more sway over the future of the oil industry, sources said. The last country to join OPEC was Congo-Brazzaville in 2018 as part of an earlier expansion of African membership.

The new mission is being driven by Haitham al-Ghais, the OPEC secretary general, and Equatorial Guinea's Antonio Oburu Ondo, the 2023 OPEC president.

"OPEC is here today in full force... because we are an integral part in Africa and Africa is an integral part in OPEC," Ghais said at an African energy conference in Paris in May. In 2024, Gabon took over OPEC's rotating presidency.

"These are discussions the secretary general is holding with many countries," said an African source. "If you want to be strong in a world where if you are weak people will not listen to you, it is very important that... we are bringing Africa, Gulf countries, Asian countries and so on."

New candidates

OPEC counts among its 12 members Nigeria, Congo-Brazzaville, Gabon and Equatorial Guinea from sub-Saharan Africa, while Libya and Algeria form its North African contingent. Sudan and South Sudan are part of the wider OPEC+ alliance, formed in 2016 to help counter intensifying competition from US shale companies.

Angola, however, quit OPEC in January in a dispute over its production quota.

Together, the 22-country OPEC+ group controls almost half of global production capacity and pumped 41.04 million b/d of crude in April, according to the latest Platts survey by S&P Global Commodity Insights.

The group is due to meet virtually on June 2 to strategize on how to shore up the market through the coming months, with analysts expecting a rollover of voluntary cuts due to expire in June. The Platts Dated Brent crude benchmark is down around $15/b since last September.

No new members are expected to be announced at the meeting, but delegates say the African recruitment drive is focused on the long game, with emerging producers courted for membership once they begin exporting their crude in earnest.

NJ Ayuk, chairman of the African Energy Chamber, said African countries would be more likely to sign the Declaration of Cooperation and join OPEC+, rather than the core group.

Namibia is one candidate. Last year, petroleum commissioner Maggy Shino told S&P Global Commodity Insights that she looks forward to joining the OPEC "family" when Namibia starts producing this decade.

Billion-barrel finds by TotalEnergies and Shell have made its Orange Basin one of the world's hottest frontiers and triggered an influx of IOCs. According to Commodity Insights forecasts, Namibia will see first oil through TotalEnergies' Venus development in 2029, reaching more than 380,000 b/d by 2035, which could increase with additional discoveries.

According to OPEC, Ghais and Namibian energy minister Tom Alweendo recently discussed working together "under the umbrella of the charter of cooperation."

Ghais has also held talks with emerging producers Ghana and Senegal.

Just prior to Senegal's election in March, the country's energy minister and Ghais "explored possible avenues to strengthen cooperation between Senegal and the organization, and ways for OPEC to work with Senegal in developing the country's oil production," OPEC said in a statement. Senegal is weeks away from bringing Woodside's Sangomar, the country's 100,000 b/d maiden oil project, online.

Ghana is currently producing 130,000 b/d, down slightly since 2019 due to underinvestment.

"If we get to where we need to to become members, we would," Matthew Prempeh, Ghana's energy minister, told Commodity Insights in a March interview. "The secretary general of OPEC has wanted to meet me. We are members of the African Petroleum Producers Organization, and OPEC is on the horizon. I believe we will get there."

Even Uganda has expressed an interest in having a seat at oil's top table as it prepares to start pumping up to 210,000 b/d from its Rift Valley oil fields in 2025. "I met the [OPEC] secretary general during ADIPEC recently, and I told him that I'm about to join," the country's energy minister Ruth Nankabirwa joked in an October interview, referring to the industry conference held annually in Abu Dhabi. "Come 2025... I'll be an oil producer."

Waning influence

The charm offensive comes as the continent's influence in OPEC+ has waned and follows Angola's acrimonious exit from the group following a tense meeting in November 2023 that saw several African members' quotas slashed.

Angolan officials said the reduction of the country's quota by almost a quarter -- from 1.46 million b/d to 1.11 million b/d -- would deter upstream investment, even though it had not produced anywhere near its target for months, and complained that its voice was not being heard in OPEC+, which is co-chaired by Saudi Arabia and Russia.

But no other African countries joined Angola in quitting their membership, and since then, the continent's contingent, apart from Gabon -- which overproduced by 30,000 b/d in April according to the Platts OPEC+ survey -- look chastened, with output still below quotas due to underinvestment, technical issues at aging fields and, in the case of Nigeria, rampant crude theft.

In the first four months of 2024, Nigeria produced 1.46 million b/d of crude on average, below its 1.5 million b/d quota, according to the Platts survey. South Sudan has seen production fall from 150,000 b/d to 60,000 b/d due to a rupture on its export pipeline through war-torn Sudan. Both Congo-Brazzaville and Equatorial Guinea are underproducing by 20,000 b/d.

As recently as 2020, African members were making production cuts to pull the market out of the coronavirus pandemic, but their clout took a hit after the death of Nigerian former secretary general Mohammed Barkindo in 2022. African members tend to be more reliant on IOCs than major Middle Eastern producers and are typically more focused on volumes than prices since they import most of their refined products.

Still, an African source said the contingent remains an important part of OPEC+, adding that Angola's departure was likely related to an internal "political issue". To that end, the source said, Angola would be welcomed back if it so chose.

"It's like in couples, you might have very hard situations, but this doesn't mean you will definitively divorce. The door is still open."