The Organization of the Petroleum Exporting Countries (OPEC) may be shrinking in influence, but it may soon grow in size, with its newest member Equatorial Guinea calling on other African producers to join the cartel and protect the value of their resources.
Gabriel Obiang, the nation's minister of mines, industry, and energy told delegates to a conference in Cape Town, "African countries that are producing the same as Equatorial Guinea, or even more than Equatorial Guinea, I encourage them to join OPEC because that's the platform that is definitely going to be fighting for your own resources."
Obiang's country is aiming to increase its production to 300,000 barrels per day by 2019 and to 500,000 per day in five years, compared to its current 269,000 per day.
Gabriel Obiang, Equatorial Guinea
I encourage them to join OPEC because that's the platform that is definitely going to be fighting for your own resources
Obiang reasoned, "If in 10 years oil becomes a commodity that the developed countries don't want -- they want to focus on just gas, solar -- what are the African countries going to do?"
He said, "It's very important to know what our brothers, our bigger brothers in the region, what Nigeria is doing, what Algeria is doing" and communicate that throughout the continent.
But it's unclear what value OPEC would bring to African nations should world demand shift to renewables, and it's equally unclear if OPEC would benefit from an increased membership considering its current strategy of reducing production - recently extended to another nine months after having negligible effect on global stockpiles - is being greeted with critical derision and market trepidation.
Jeff Currie, head of commodities research for Goldman Sachs Group Inc. on Wednesday reiterated the main complaint against the cartel by stating, "OPEC should have cut deeper, as opposed to longer, to generate backwardation, as well as communicated to the market a credible threat of larger market share."
He said OPEC should make deeper production cuts now and simultaneously warn it will revive output sharply once the surplus clears; this will presumably cause long-term prices to fall below short-term prices, thus making it more difficult for OPEC's competitors (ie: the U.S.) to finance comebacks.
Amrita Sen, chief oil analyst for Energy Aspects Ltd., agreed and added that exports should also be addressed: "Key OPEC members should quietly take additional barrels off the market; the market will not give OPEC many more chances."
Eugen Weinberg, head of commodities research at Commerzbank AG, took a different tack: "Ever since the original OPEC agreement was achieved last November we've been advocating it would not have a lasting price effect and only lead to market share shifting away from OPEC towards U.S. shale.
"The only viable long-term strategy for OPEC remains to do nothing, and increase its production instead."
But all this talk may be a classic case of closing the barn doors after the horses have fled, and Wednesday's analysis was capped by reports that another unexpected source for yet more crude may be none other than Canada, home to the third-largest oil reserves and is the fifth-largest natural gas producer in the world.
A new survey for the Canadian Association of Petroleum Producers (CAPP) reveals that the more than 22,000 people in 32 countries surveyed view Canada as a preferred supplier in meeting growing global oil and gas needs.
Jeff Gaulin, vice-president, communications with CAPP, said, "We were really quite surprised with that: when you look at all the countries around the world, there are so many oil and gas suppliers, but when we asked people around the world if you can't make it yourself, where would you want to buy it from, the answer was clear, and Canada was number one in the world."
Even if global stockpiles continue to rise along with tensions between OPEC and other nations, Tim Worstall, a Fellow at the Adam Smith Institute, reminded observers that there's a clear-cut winner to all of this: "Consumers benefit from the competition far more than anyone else in the equation and it is the very competition itself which leads to the consumer gains."