Opening address to the 122nd (Extraordinary) Meeting of the OPEC Conference

No 12/2002
Vienna, Austria
12 Dec 2002

by His Excellency Dr Rilwanu Lukman, President of the Conference and Presidential Adviser on Petroleum and Energy, Nigeria

Excellencies, ladies and gentlemen,

It gives me much pleasure to welcome you to the 122nd Extraordinary Meeting of the OPEC Conference. The purpose of the Meeting is to review the situation in the international oil market and particularly the outlook for the first half of 2003. As you will recall, at the last Meeting of our Conference — in Osaka, Japan, in September — we decided that our existing production agreement would remain unchanged. This was the agreement which came into force at the beginning of this year, with an overall output ceiling of 21.7 million barrels a day for our Member Countries, excluding Iraq.

The market has been well-supplied with oil since our September Meeting and, up to very recently, there was a general softening of the price structure, of several dollars a barrel. The political tensions in Venezuela over the past week have resulted in a slight rise in prices on world markets. However, prices remain comfortably inside OPEC’s price band of $22–28/b. To complete the picture, the year-to-date price of around $24/b is slightly above the average level for the whole of 2001. Moreover, this is the second-highest annual figure since 1985.

How has this come about? Well, there have been two significant features affecting prices since the September meeting, on top of the normal market behaviour one expects with the onset of the Northern Hemisphere winter.

The first is the uncertainty that has been created by the political tensions in Iraq and, most recently, Venezuela. The situation in the Gulf has led to talk of “war premiums” being placed on the price of oil and has seen prices fluctuate in line with the tensions. OPEC has two overriding messages, with regard to these two disturbing situations. First, we wish to reassure consumers that we will do everything we can to maintain steady, secure supplies of crude at all times, to cover any eventuality that may arise. We have sufficient spare capacity within our Organization to do this.

And our second message is that we hope — and, indeed, believe — that the need for this will not arise.

It is always deeply saddening for OPEC when there are serious political problems — of whatever nature — affecting our Member Countries. This is especially the case when they involve, separately, two of our five Founder Members, to whom our Organization has owed so much over a period or more than four decades, as we have successfully sought to assert our legitimate sovereign rights to the exploitation of the hydrocarbon resources which lie within our national borders. It is our most fervent wish that quick, peaceful, amicable and enduring solutions are found to these two crises, in the best interests of the citizens of these countries and for the furtherance of world peace and harmony generally.

The second significant feature affecting prices over the past two months has been the discrepancy between production targets and production realities, which has received much coverage in the media. However, let me put the situation in its true perspective: as I have already stated, consumers have received all the crude they require and prices have remained well within our price band. The implication, therefore, is that we need to look carefully at our existing production agreement, to see whether it needs revision to reflect the current realities in the market and to accommodate the anticipated trends over the coming year. Energy trends, of course, are influenced by trends in the global economy and particularly the performance of the leading industrialised nations; in this respect, the general mood is downbeat until we are at least well into 2003.

We also call on fellow oil producers from outside our Organization to continue to support OPEC’s efforts to achieve sustainable order and stability in the international oil market. We have greatly welcomed the measures most non-OPEC producers have adopted during periods of excessive volatility or extreme price levels over the past decade, and the market has benefited enormously from this. However, the market requires more than just rainy day support if it is to thrive in the future. Cooperation — or, for those who do not wish to use that word, “harmonious endeavour” — is an ongoing process, which should exceed the bounds of time and circumstance.

It should embody the “spirit of Osaka”, as expressed at the Eighth International Energy Forum, which was held in Osaka just after our last Conference. The abiding message of the Forum was to enhance mutual understanding and cooperative dialogue among energy-producing and energy-consuming countries. We support this sentiment fully. Indeed, one of our Member Countries, Saudi Arabia, is going to provide the home for the Forum’s permanent Secretariat in Riyadh. Our Member Countries have played a major role in developing producer-consumer dialogue over the past decade, culminating in the present, highly encouraging situation.

Excellencies, ladies and gentlemen,

My term as President of the OPEC Conference ends on 31 December 2002. I have found this year to be an invigorating and challenging period for our Organization, not just in the energy market, but also across a much broader spectrum, that embraces issues relating directly to the general well-being of mankind in the opening decades of the 21st century; this concerns, in particular, the perennial plight of the impoverished nations of the world. Within the space of just two months, from the end of August, there were the World Summit on Sustainable Development in Johannesburg, the Eighth International Energy Forum in Osaka and the Eighth Conference of the Parties in the climate change talks in New Delhi. At each of these three major supranational events, OPEC and its Member Countries sought to reassure the world at large that, for decades to come, the petroleum industry has the reserves, the will, the commitment and the integrity to guarantee secure supply to consumers in a manner fully compatible with the requirements of sustainable development in a cleaner, safer and healthier environment.

I believe we have achieved much success in getting this point across. The credit for this must go to the Staff Members of the very building in which we are gathered today, for the high standard of support that they have consistently provided to our Ministers and other senior officials of our Organization. I should, therefore, like to go on record of thanking each and every of them for this.

Finally, let me wish every success to my friend and colleague, His Excellency Abdullah bin Hamad Al Attiyah, Minister of Energy and Industry of Qatar and Head of its Delegation, who takes over as President of the OPEC Conference on 1 January 2003.

Thank you.