Opening address to the 157th Meeting of the OPEC Conference

No 7/2010
Vienna, Austria
14 Oct 2010

by HE Wilson Pástor-Morris, Minister of Non-Renewable Natural Resources of Ecuador and President of the Conference

Excellencies, ladies and gentlemen,

Welcome to Vienna for the 157th Meeting of the OPEC Conference.

It is a great honour to attend an OPEC Conference for the first time as Head of Ecuador's Delegation and, furthermore, to have the privilege of opening it as Conference President.

Let me now extend a special welcome to Her Excellency Mrs Diezani Alison-Madueke, the Minister of Petroleum Resources for Nigeria, who is also attending our Conference for the first time as Head of Delegation. As many of you already know, Her Excellency is the first-ever female Head of Delegation in our Organization.

We are also pleased to welcome back Algeria's Minister of Energy and Mines, His Excellency Dr Yousef Yousfi, who previously attended our Conference as Head of Delegation in 1997-99. For some of that time, he served with distinction as Conference President.

Let us too express our appreciation to their esteemed predecessors: His Excellency Dr Chakib Khelil for Algeria, His Excellency Germánico Pinto for Ecuador and His Excellency Dr Rilwanu Lukman for Nigeria.

Since we last met in March, OPEC has celebrated a landmark occasion - its 50th anniversary on 14 September. This has given us a chance to reflect upon our achievements over the past half-century.

Notably, OPEC began as a group of five heavily exploited, oil-producing developing countries seeking to assert their sovereign rights in an oil market dominated by the established multinational oil companies. Today OPEC is a major player on the world energy stage. Our 12 Member Countries are masters of their own destiny in their domestic oil sectors and their influence reaches out into the energy world at large.

These countries have shared both the good times and the bad times over the past 50 years. However, a common desire to ensure that sales of their oil on world markets help finance their economic and social development has provided the foundation for their unity. This is strengthened by their continuing commitment to objectives that were defined on the very day that OPEC was born in Baghdad in September 1960 - stable markets, reasonable prices, secure supply and fair returns to investors.

The expansion of OPEC's objectives to cover causes of a broader, more humanitarian nature illustrates another healthy aspect of our Organization of which we can all be proud. The three Summits of OPEC's Heads of State and Government have played a significant role in this. The First Summit in Algiers in 1975 addressed the plight of the poorer nations and called for a new era of cooperation in international relations. It led directly to the creation of the OPEC Fund for International Development. The Second Summit in Caracas in 2000 covered such key topical issues as security of supply and demand, producer and consumer dialogue and the protection of the environment, and emphasised that economic and social development and the eradication of poverty should be the overriding global priority. And the Third Summit in Riyadh in 2007 took this process further, when it defined the three guiding themes for OPEC actions: stability of global energy markets; energy for sustainable development; and energy and environment.

Excellencies, ladies and gentlemen,

OPEC has come a long way over the past 50 years. And we shall continue along this path over the next 50 years!

Turning now to the present situation, the oil market has experienced a modest degree of price stability since our last Conference in March. The price of our Reference Basket has averaged around US $75 a barrel so far this year. Indeed, the weekly average price has remained within a range of $70-76/b since the beginning of June, apart from one week in early August and over the past fortnight. The current average price level appears to receive a positive reaction from producers and consumers at a time of much economic uncertainty in the world at large.

However, the potential for a return to high price volatility remains. As recently as May, for example, the Basket price fell by 20 per cent in just over three weeks, from $84.36/b on the third of the month to $66.84/b on the 25th. Such a turn of events could easily happen again, if we are not careful.

Therefore, with so much uncertainty about the world economic outlook as we head into winter in the Northern Hemisphere, all parties in the industry must redouble their efforts to counter future price volatility. Indeed, for oil producers assessing the oil market outlook, the focus of attention is now more on the rate, the size and the global spread of economic recovery than on the usual seasonal factors for this time of the year.

The production agreement OPEC reached in Algeria nearly two years ago has served its purpose well. It quickly reduced volatility at a critical time for the world economy and supported price growth to the more sustainable levels we see today. We shall be looking at the agreement again at today's Meeting, to see how this matches up with the uncertain market outlook for the coming months.

'Compliance' is a word that has been on many people's lips throughout the period of this agreement. It is an issue that will feature in our discussions today, as we review our production agreement. But we shall not lose sight of the bigger picture. Neither should anyone else. The achievement of market order and stability is the responsibility of all parties. It is not just a burden for OPEC alone. We all stand to gain from market stability, and so we must all contribute to achieving it and maintaining it.

Excellencies, ladies and gentlemen,

This has been a memorable year so far for OPEC, as we celebrate our Golden Jubilee with a series of special events in both Vienna and our Member Countries. We hope these have led to a better understanding among the public at large of our Organization, its aims and activities.

Let me close by saying that, as the dust settles and life returns to normal, we shall remain true to the task of ensuring that the oil market functions as well as it can at all times - in the best interests of producers and consumers alike and in support of sound world economic growth.

Thank you for your attention.