MY KOLKATA EDUGRAPH
ADVERTISEMENT
regular-article-logo Friday, 22 November 2024

Angola exit from Opec raises import options

This move could offer an opportunity to diversify imports and reduce reliance on discounted Russian crude, but uncertainties cloud the Angolan opportunity

R. Suryamurthy New Delhi Published 04.05.24, 11:21 AM
Representational image

Representational image File image

Indian oil refiners are setting their sights on Angolan crude following the African nation's departure from Opec, according to industry sources.

This move could offer an opportunity to diversify imports and reduce reliance on discounted Russian crude, but uncertainties cloud the Angolan opportunity.

ADVERTISEMENT

Angola, sub-Saharan Africa's second-largest oil producer, left Opec earlier this year citing frustrations with production quota restrictions.

"Angola quit Opec earlier this year because its quota limits hindered the country's plans to stabilise crude production above 1 million barrels a day," reports said. While Angolan production has shown slight upticks recently, it remains below ambitions.

Despite Angolan officials' promises, significant output increases have not materialised yet. Years of insufficient investment and exploration have hampered production, leading to a decline from a peak of 1.9 million barrels per day (bpd) in 2010.

Traditionally, Indian refiners have been major buyers of African oil, including Angolan crude.

However, this trend shifted due to the recent abundance of heavily discounted Russian oil.

The share of West African crude imports in India's total import basket dropped to 4 per cent in 2023, from 13 per cent in 2019.

This translates to a drop from 600,000 bpd of West African imports in 2019 to a mere 200,000 bpd in 2023, with Angolan imports specifically shrinking from 119,000 bpd to a meagre 60,000 bpd.

Analysts attribute this decline to two key factors: the rise of discounted Russian oil and Angola's own production struggles.

"There were two main reasons for crude imports dropping from Angola," said Himi Srivastava, South Asia oil analyst at S&P Global Commodity Insights.

"First, there was an overall drop in West African imports due to a rise in the share of Russian barrels, and secondly declining production in Angola," Srivastava said.

For Indian refiners, a potential increase in Angolan output presents a valuable opportunity, as quoted by industry sources: "They would be keenly looking at the output as it would open up a new opportunity to diversify its oil sourcing."

This could potentially reduce dependence on discounted Russian supplies. However, this path is not without challenges.

Follow us on:
ADVERTISEMENT
ADVERTISEMENT