US, WASHINGTON (ORDO NEWS) — The fall in oil prices has led African producers to face not only the loss of income when they need them to fight the coronavirus, but also a decrease in their hard-won market share, which they may never return, reports Reuters .
African producers such as Nigeria, Angola and Algeria cannot compete with the lower costs of the former allies of Saudi Arabia and Russia, which flood the oil market.
In a sign of despair, the Congolese Minister of Oil on March 20 sent OPEC Secretary General Mohammed Barkindo a letter calling for an urgent meeting to find a way to prevent member countries from plunging into recession.
Despite the desperation that former OPEC + participants – Russia and OPEC members – may come to help, African oil producers do not have much leverage.
“They have no power,” one source in the Nigerian oil industry told Reuters. “All they can do is ask.”
Although non-OPEC countries such as the United Kingdom, Norway, and the United States have relatively expensive production, their diversified economy means that they are not dependent on oil.
The fall in oil prices not only affected the already limited budgets, but also led to the fact that oil companies cut spending by billions.
“Companies review their entire portfolio every day,” said Roderick Bruce, chief research analyst for Africa at IHS Markit, who predicts that final investment decisions on the continent could hit historic lows this year.
“They (African countries) are in a very difficult situation,” Bruce added, citing higher production costs.
Larger countries are also pushing African producers out of incredibly competitive spot trading.
They can not be compared with flexible, aggressive marketing, as a result of which Saudi Arabia lowered its selling prices almost immediately after the failure of the extension of the OPEC + transaction.
In comparison, it took Nigeria nearly two weeks to make record cuts in its official selling prices.
While production in Angola fell from nearly 2 million barrels a day ten days ago to 1.4 million barrels a day, the country was in the process of reforms that were supposed to increase production.
Equatorial Guinea is trying to sell new licenses and find a replacement for ExxonMobil, which wants to stop working in this country.
Contact us: [email protected]
The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.