Opening Remarks by Kuwait's Minister of Oil and Minister of Electricity and Water, and Chairman of the JMMC
Delivered by HE Issam A. Almarzooq, Kuwait’s Minister of Oil and Minister of Electricity and Water, and Chairman of the Joint Ministerial Monitoring Committee (JMMC), at the 2nd Meeting of the JMMC, 26 March 2017, Jumeirah Messilah Beach Hotel, Kuwait.
Excellencies, ladies and gentlemen,
Good morning. I would like to welcome you to the second meeting of the Joint Ministerial Monitoring Committee (JMMC) and start by thanking you all for accepting our invitation to attend this meeting in Kuwait.
It is a pleasure and an honour for Kuwait to be both host and Chair of this event. It is part of our contribution to this historic process – and I hope that during your stay in Kuwait you will have the chance to enjoy some of our hospitality.
I would like to commend His Excellency Alexander Novak, Russia’s Minister of Energy, for serving as Alternate Chairman of this Committee – and for his tireless work and support to this process. Additionally, I would like to also extend my thanks to His Excellency Jabbar Al-Luiebi, Iraq’s Minister of Oil, in honouring our invitation at very short notice.
I would like to recall that the JMMC was established directly in response to OPEC’s 171st Ministerial Conference decision of 30 November 2016, and the subsequent historic Declaration of Cooperation made at the joint OPEC-non-OPEC Ministerial Meeting of 10 December 2016.
These landmark efforts were made because the oil industry could no longer continue along the same path it was on in 2015 and 2016. Something had to be done to address the major challenges that were suffocating the industry, and impacting current and future oil supplies. Producers everywhere recognized the need to stimulate the acceleration of the drawdown of the stock overhang, in order to bring the necessary market rebalancing forward, and ensure that much-needed investments returned to the industry.
In support of this historic cooperation, this Committee, which concluded its inaugural meeting on 22 January at the OPEC Secretariat in Vienna, put together a framework of monitoring mechanisms. We are so far pleased with the level of conformity to this framework.
Part of that framework included the creation of a Joint Technical Committee – JTC – which met for the second time last Friday in Vienna. The mandate of the JTC was to produce a monthly report for the JMMC and I would like to thank the JTC for its support so far, and for the very useful report which has been provided to us. This will help move this process forward.
As you know, the JMMC is tasked with ensuring that the objectives of the Ministerial Conference decision and the Declaration of Cooperation are achieved through successful implementation of voluntary adjustments in production. In addition, the last time we met we reaffirmed our commitment to joint cooperation for the achievement of a lasting stability in the oil market – in the interest of oil producers, consumers and the industry. The Committee thereafter reiterated its resolve to full and timely conformity to the agreements.
Our task here today is to discuss oversight and conformity issues, and to then report to the OPEC-non-OPEC Ministerial Meeting on the 25th of May, the status of implementation. So far, we have seen some progress, with very positive signs that the conformity from both OPEC and non-OPEC countries has successfully been demonstrated to the outside world.
In addition, production numbers for January and February were well received and the market has responded affirmatively to the determined efforts of all participating countries.
I want to emphasize here that some producers have over-performed. They certainly deserve recognition for their efforts. So I would like to expressly offer my appreciation to both Angola and Saudi Arabia for conforming beyond expectation. I hope their achievements will motivate other participants to reach their own goals – and perhaps to even go further.
Meanwhile, some other countries have not been able to meet their production adjustments due to temporary difficulties.
I would like to candidly say that, in general, more has to be done. We need to see conformity across the board. We assured ourselves – and the world – that we would reach our adjustment to 100 per cent conformity.
Our voluntary adjustment is and will remain 100 per cent, and although this should be seen as a collective effort, individual countries also need to take their conformity very seriously. If we reach our common objective, we could see balance returning to the market by the third quarter of 2017. If not, this date may be pushed further out.
As we have observed over the past couple of weeks, stocks remain stubbornly high, particularly in the US, where a seasonally rising trend has hit new historically high levels. We have also seen some traders liquidate their long positions and Brent prices have dropped from the mid-50s to the low-50s. Volatility has also increased.
At the same time, while investments may be returning in some of the industry’s short-cycle projects, there is little investment going into the long-cycle projects that are the baseload of the industry.
All this should focus our minds. We need to further intensify our efforts.
The uncertainty we have witnessed may continue until the trend of inventory drawdowns asserts itself and the market becomes more comfortable with its capacity to absorb additional marginal supplies.
Excellencies, ladies and gentlemen,
At today’s meeting, we hope to facilitate an exchange of joint analyses and outlooks. These are important, as they will provide valuable input to the evaluation of the conformity process.
I should also remind everyone that there will be one more meeting of the JMMC before the Meeting of the OPEC Conference in May. Until then, the work undertaken by this Committee remains the main driver behind future actions of the Ministerial Meeting. We thus hope that your conformity will remain unwavering – and that we can look forward to positive results between now and then.
I would like to remind you all that we are under close scrutiny by the international community and the financial markets. The work of this Committee is thus essential to help rebuild confidence in the global oil markets and to achieve the sustainable stability that we are striving for. I thus would like to encourage you to do your very best today, and in the coming weeks and months, in the lead-up to our next meeting. There is a lot at stake.
Excellencies, ladies and gentlemen,
Each of us is looking forward to the day when investments once again reach healthy levels, and the world economy is strong and robust. This will be well-served if we do our work – and the long-term deepening of ties and ongoing cooperation between OPEC and non-OPEC countries will go a long way to supporting such goals.
I would like to thank you all for your attention. I will now give the floor over to His Excellency Alexander Novak, Co-Chairman of the JMMC.
HE Issam A. Almarzooq (c) delivers his opening remarks at the meeting
The 2nd meeting of the JMMC in Kuwait attracted a large number of journalists