Ecuador to Exit OPEC in January
(Bloomberg) -- Ecuador, one of OPEC’s smallest members, will leave the group in January as it seeks to increase revenue from crude oil sales.
Ecuador hasn’t been adhering to OPEC quotas as it seeks to boost production, which has held around 530,000 barrels a day for the past year. In September, the country’s output was ahead of only the Republic of Congo, Gabon and Equatorial Guinea in the 14-member Organization of Petroleum Exporting Countries.
“The decision is rooted in the issues and internal challenges that the country needs to bear related to fiscal sustainability,” the country’s resources ministry said Tuesday in an emailed statement. The country will “continue to support all efforts that seek to stabilize the world oil market,” the ministry said.
Earlier this year, Resources Minister Carlos Perez said Ecuador was going ahead with higher oil production than the latest ceiling set in an agreement between global oil exporters that was aimed at shrinking a market glut. The nation’s small role in OPEC meant it didn’t need to stick to the group’s united front, he said in February, when output was already above its quota.
That wasn’t the first time the South American country didn’t adhere to limits. In 2017, Perez got a call from then Saudi Energy Minister Khalid Al-Falih when he abandoned the OPEC deal because of the nation’s troubled fiscal and economic situation. Ecuador signaled at the time that it wanted to keep increasing production.
The country’s departure comes amid efforts by President Lenin Moreno to reverse economic policies imposed by his predecessor, Rafael Correa, who restarted Ecuador’s OPEC membership in 2007, 15 years after it had been suspended. Local oil analysts have criticized Ecuador’s participation because it has had to comply with output ceilings while on its own not producing enough to influence market prices for crude.
Ecuador isn’t the only country to leave OPEC over the years. Indonesia suspended its membership in 2016, a year after it was readmitted to the group, while Gabon rejoined the same year after leaving in 1995. OPEC output sank the most in 16 years last month after an attack on Saudi Arabia’s energy facilities. The group and its allies have committed to cutting supply by 1.2 million barrels a day to support prices.
--With assistance from Lucia Kassai.
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