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Entrepreneur says it "makes no sense" for Angola to remain in OPEC when it loses 6.6 million a day

A businessman from the oil sector said this Friday that "it makes no sense" for Angola to continue in OPEC, where it "is burning" 6.6 million dollars daily due to cuts imposed by the organization, considering that the country is in an "economic self-mutilation".

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"It makes no sense because it is harmful, it cuts our tax revenues. If Angola is cutting 6.6 million dollars/day, it is certain that all this money does not enter the coffers according to the commitments that the country has with the multinationals, then it has no need to be in OPEC," said Pedro Domingos Godinho.

The businessman, with four decades of experience in the oil sector, said, in declarations to Lusa, that the weight that Angola has in world oil production, with a participation of 0.9 percent, and at the level of the Organization of Petroleum Exporting Countries (OPEC) with 4.6 percent, is irrelevant.

"It's sacrificing its people to benefit other economies, which means that if Angola were outside the organization it wouldn't have to cut and would always benefit from cuts, because this cartel will not cease to exist if Angola leaves," he stressed.

Angola was elected on November 30 to the rotating presidency of the OPEC ministers' conference in 2021 to replace Algeria.

Regarding the presence of Angola in the leadership of the organization, Pedro Domingos Godinho considered itself to be "a big trap" because there is a "very high risk" of Angola facing increased cuts in production.

"We began to address this issue in March 2018 and we have always questioned Angola's participation in OPEC for four fundamental reasons, namely because oil is the backbone of Angola's economy," he said.

"And within this perspective, the increase in revenues from any product necessarily passes through its volume of production, so being the 'commodity' that guarantees 95 percent of exports, 60 percent to 70 percent of GDP [Gross Domestic Product] and 45 percent of tax revenues, naturally to use that we have to exactly increase our revenues and increase production," he said.

With the natural decline in production due to lack of investment over the last 10 years, the businessman, Angola, recalled, with the drop in the price of oil on the international market "is penalized threefold.

"Namely because the price of oil is low, because the variable 'production' is also low, because we can't increase due to the natural decline of the fields, and we have the third factor that are the cuts of OPEC," he noted.

Angola, which joined OPEC in 2007, is the second largest oil producer in sub-Saharan Africa and has in this product the largest source of revenue for the country.

Pedro Domingos Godinho recalled that many factors, such as the trade war between the United States of America and China in 2019, the OPEC emergency meeting in late 2019 to define production cuts, and the "flood" of oil in the market by Saudi Arabia have contributed to the "dizzying fall" of the product.

"Prognosticing a crisis would be a very natural thing and it was in this sense that we were alerting our leadership to be attentive, unfortunately this did not happen, we were not heard and what happened is that in 2020 the price fell vertiginously", he pointed out.

"As at that time Angola's reference quota was 1.5 million barrels/day, so it was agreed [at OPEC level] that all countries should cut 23 percent of their production, which for Angola would be 351,000 barrels," he said.

The businessman stressed that the Angolan economy has already been weakened since 2014, when the "misfortune began," so it was already anticipated "a possibility of cuts in production and the possibility of imposing OPEC cuts in production at any time.

"Therefore, in 2018, we were alerting our leadership to pay attention to the possibility of suspending or withdrawing from OPEC, but unfortunately we were not heard", he regretted.

In view of the requirement to cut 351 thousand barrels, "fortunately for Angola the levels were already at 1.3 and 1.4 million barrels/day and what was concluded is that Angola should produce, but cut production from 1.4 million to 1.1 million barrels," he explained.

According to Domingos Godinho, Angola "had to cut 220 thousand barrels/day, which multiplied by 30 dollars is 6.6 million dollars" and, from April onwards, "the misfortune began to be accentuated, so that the price remains low.

"Last February we warned that Angola had to prepare to live with the price between 35 and 40 dollars, many questioned, did not believe and in March we began to live the disgrace," he reiterated.

The president of the American Chamber of Commerce in Angola (Amcham-Angola) also said that, with the cuts imposed by OPEC, Angola "is burning", globally, 6.6 million dollars/day, remembering that from this amount are still subtracted the costs of sharing production with multinationals, among other charges.

"Angola is already at that stage, now that it takes over the [OPEC] presidency it will be a big trap, even though society doesn't realize and feel happy and rejoice that Angola is in the presidency," he insisted.

"Therefore, if in 2020 Angola still had that prerogative to violate the agreement, in the chair of the president it will not be able to violate," he warned.

The "vertiginous" drop in oil in 2020 was in competition for the cut of 351 thousand barrels/day, but it can still get worse: "In a hypothetical scenario, if Saudi Arabia decides to maintain the cuts of 23 percent of Angola's production, when we are only producing 1.4 million barrels, this means that Angola will have to cut about 400 thousand barrels.

"For an economy already completely weakened and wasted where we have seen every day or constantly young people taking to the streets because the percentage of unemployment is on top, this is a harbinger of social upheaval because of the country's economic difficulties," he warned.

Pedro Domingos Godinho admitted "not understanding" that in the middle of the crisis, "with many citizens dying of hunger," the country takes 6.6 million dollars out of the economy every day.

"Therefore, in conclusion, Angola is in a process of economic self-mutilation," said the businessman, questioning: "What are the advantages of Angola being in OPEC?

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