Angola’s Departure From OPEC Opens Door for Increased Chinese Investment

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Angola’s decision to exit the Organization of the Petroleum Exporting Countries (OPEC) may pave the way for enhanced Chinese investment in the country’s oil and other sectors, strengthening a longstanding partnership. The move comes amid disagreements with OPEC over output quotas and aligns with a recent agreement between China and Angola, emphasizing expanded cooperation.

China, recognized as a pivotal partner by Angola’s Foreign Minister Tete Antonio, stands poised to deepen its involvement in Angola’s oil sector, which constitutes 90% of the nation’s exports. While Angola seeks economic diversification, revenue generation remains crucial.

Antonio highlights the importance of technology, a skilled workforce, and strategic partnerships for Angola’s transition away from oil. He calls for increased Chinese investments, particularly in sectors like coffee, batteries, and solar energy.

With freedom from OPEC output constraints, China could play a more substantial role in Angola’s oil sector, addressing years of underinvestment. Angola’s need for diversification and insufficient non-oil revenue sources align with China’s interests. China has a considerable stake in Angola, holding nearly $21 billion in debts from loans dating back to Angola’s post-civil war reconstruction.

China’s vested interest in Angola’s economic overhaul is evident, given the country’s heavy reliance on Chinese creditors. Despite China receiving additional oil supplies from Russia, Angola’s oil output decline demands fresh investment.

While environmental campaigners favor Angola’s departure from OPEC as a step toward a green transition, the COP28 U.N. climate deal fell short of demanding a phase-out or reduction of fossil fuels. Renewable energy economics remain less attractive than oil and gas returns.

Over the past decade, Chinese firms have invested nearly $14 billion in Angola, primarily in the energy sector. Recent investments in telecommunications infrastructure, transport, and healthcare signal China’s commitment to Angola’s development. The latest initiative offers six African countries, including Angola, tariff-free access to China’s consumer market on 98% of imported goods, starting on Christmas Day.

China’s foreign ministry spokesperson, Wang Wenbin, expresses a commitment to advancing practical cooperation with Angola based on equality and mutual benefit.

The evolving dynamics suggest a deepening economic partnership between China and Angola, leveraging China’s investments to facilitate Angola’s economic diversification beyond oil dependence.