News Analysis: Enlarged membership to boost OPEC's clout on oil market

The Organization of Petroleum Exporting Countries (OPEC) started enlargement for the first time in over 30 years by admitting Angola at the beginning of 2007, and was poised to tighten the cartel's grip on world oil market.

With an estimated daily output of some 1.4 million barrels, Angola is Sub-Saharan Africa's second biggest oil producer just after Nigeria.

Possible new members also include Sudan and Ecuador.

Altogether, the three countries could boost OPEC's output by 2 million barrels per day (bpd), or 6 percent, and bring 10.5 billion barrels of proven reserves to the organization which already boasts 75 percent of the world's total.

Analysts said the enlargement would further increase OPEC's influence on the world oil market with higher production share and reinforced voice over oil prices, at a time when challenges are perceived from such producers as Russia, Mexico and others.

Russia has become the world's second largest oil producer with an estimated output of some 9.6 million bpd. Mexico and some non-OPEC African oil-producing countries are also rising to squeeze market share from the oil group.

While its overall market influence could be increased through the enlargement, observers also see challenges for the organization.

The International Energy Agency said that absorbing Angola, Sudan and Ecuador could impede investment by foreign oil companies in the three countries and slow the growth of spare production to protect consumers from supply shocks.

OPEC members -- Algeria, Indonesia, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, Venezuela, Iraq and the newcomer Angola, regulate their oil exports and are assigned production limits under the quota system at the heart of the organisation.

With more members, organizational efficiency could also be affected. The organization cut output in November, 2006, from 27.5 million bpd to 26.3 million in a bid to control oil prices, but the effects were unapparent and some members kept producing above their quotas.

At the planned March 15 talks in Vienna, which Angola is to attend as a full-fledged member, OPEC members are expected to discuss output and the much-cared topic of oil prices.

Hitting a record 78.40 U.S. dollars per barrel, oil prices remained high in the past year of 2006. Whatever changes the enlargement would bring, analysts said that OPEC members would defend the price level of 60 dollars a barrel.

Source: Xinhua