As pressure continues to mount ahead of upcoming Organisation of Petroleum Exporting Countries (OPEC) meeting scheduled for Friday this week and a pre-OPEC meeting between Saudi and Russia on Thursday, to decide what will be paid for Brent oil (Benchmark for Nigeria crude oil) in the year ahead, Africans may be having increased presence as the Democratic Republic of Congo joins the oil cartel.
If the application is approved, Congo, who produces about 250,000 to 300,000 barrels of oil will become the 15th member country of OPEC and also increase the organisation’s growing African bloc as Uganda and South Sudan have also expressed interest in becoming members.
“A vote is likely to be on the OPEC meeting agenda,” sources told BusinessDay, although a Congo representative said it could be pushed to later this year, given that the organization faces a week of thorny talks over the future of its production cut agreement.
“The Congo bid is looking good, but since OPEC has a lot of difficult issues to discuss, it’s not quite on the priority list for now,” said a representative from the country who is in Vienna for discussions with OPEC.
He added that Congo was keen to join OPEC straightaway, but the organization was facing “a few problems that it needs to sort out.”
In January, the country’s President Denis Sassou Nguesso said in a statement that he desired “imminent” membership in OPEC, which would bring Congo “to the rank of world leaders, who take decisions in international negotiations.”
Congo, which relies on oil sales for 80 percent of its revenue, is not part of the 1.8 million b/d OPEC/non-OPEC production cut agreement, but did attend the coalition’s meeting on November 30, 2017, in Vienna as an observer.
Its production would rank 13th in OPEC, ahead of fellow African producers Gabon and Equatorial Guinea. With just one 20,000 b/d refinery currently operating at around half its capacity, Congo exports almost all of its oil.
It is hoping to raise its output this year, as the Moho Nord offshore field, operated by French major Total, ramps up after beginning production last March.
OPEC has seen a recent boost in its African ranks, with Gabon reactivating its membership in July 2016 and Equatorial Guinea joining in May 2017. Angola and Nigeria are OPEC’s other sub-Saharan members, while Algeria and Libya make up its North African contingent.
Congo’s three main crude grades include the heavy medium sweet Djeno, the light sweet N’Kossa and the heavy Yombo.
Djeno is the country’s flagship export grade, with production ranging between 200,000 bpd and 250,000 bpd in 2017. Also it’s extremely popular with Chinese refiners as it yields a high amount of vacuum gasoil and fuel oil, and is also low in sulfur, according to traders.
China’s Unipec, Sinochem, PetroChina and ZhenHua Oil are all regular buyers of Djeno, with Unipec typically buying two to four cargoes of the grade every month.
The Republic of the Congo announced its application to join OPEC in January 2018. The country, which was badly hit by the oil price crash as government revenue in the oil-dependent country fell by over 30 percent from 2015, and publicly-guaranteed debt rose to 110 percent of GDP. Congo is determined to have a voice in the oil market and take a role in maintaining market stability.
While Congo has already set the ball rolling, Uganda plans to seek OPEC membership in 2020 when its oil production comes online. South Sudan and Sudan both participate in the OPEC-led production cuts. Chad has also expressed interest in joining OPEC. Altogether, the cartel currently includes six African producers, four of which are from Sub-Saharan Africa. For these countries, OPEC represents not only a voice, but access to potential investors.
