... the responsible way forward

OPEC Bulletin Commentary May 2014

When the 165th Ordinary Meeting of the OPEC Conference meets in Vienna on June 11, Ministers from the Organization’s 12 Member Countries will, as always, take stock of the general oil market situation. After over half a century of holding such meetings, proceedings run, rather aptly, like a well-oiled machine.

Delegates to the talks will consider a series of reports and studies reflecting progress in the global economic recovery. They will also carefully scrutinize various supply and demand data to see just how the land lies within oil industry affairs, specifically up to the end of the year, but also moving into 2015. This information, put together by the Organization’s research analysts and experts, forms an essential part of the Ministerial meetings and is pivotal in the decision-making process.

Based on the available data, the Ministers will weigh up the facts and decide what action, if any, to take to try and ensure that the market remains stable. It really does epitomize a balancing act. But if there is one word that sums up OPEC’s decision-making philosophy today it is — caution.

Members are fully cognizant of the fact that with something as complex as the international oil market, with all its fluid components and inherent pressures, many of an external nature, one simply cannot afford to take chances. A cautious approach has proven to be the best way to move forward in a smooth and orderly fashion.

And right now this responsible approach, dedicated to establishing and maintaining lasting oil market stability, is proving fruitful. The facts speak for themselves: oil demand is firm, supplies to the consumers are plentiful, petroleum stocks are comfortable and crude prices are reasonable and relatively stable.

OPEC’s Ministers will be keen to maintain and nurture this relative balance in the fundamentals, which can only spell good news for all energy stakeholders — the producers, the consumers and the investors.

Ahead of the OPEC Conference, several of the Organization’s Oil and Energy Ministers were at the International Energy Forum (IEF) Ministerial Meeting in Moscow (see report on page 12). Over the last two decades, the IEF has grown to become the world’s largest forum for energy-producing, energy-consuming and transit nations. The IEF likes to refer to itself as the “neutral facilitator” of informal, open, informed and continuing global energy dialogue.

But this tag is important since therein lies the success of the initiative. Its 75 members, who together account for more than 90 per cent of the world’s oil and gas supply and demand, cooperate under a neutral framework which fosters greater mutual understanding and awareness of common energy interests and challenges, in pursuit of global energy security. Discussions are frank, yet cordial.

And it really has come a long way in a relatively short period of time. Saudi Arabia’s Minister of Petroleum and Mineral Resources, Ali I Naimi, summed up the general feeling in his remarks to the meeting. He said that as a result of the Forum’s work “we have moved from a fragmented world of energy to one that is much more integrated.”

He said the IEF provided the “ideal architecture” for global energy stakeholders going forward and he believed it should become the principal organization for energy debate in the 21st century. High praise, indeed.

Many topical issues pertaining to security of energy supply and demand were discussed in Moscow, but for each subject, the same overriding consideration was stressed — that only through enhanced cooperation could appropriate and lasting responses to many of the challenges facing the energy industry be brought about.

OPEC, for its part, has been committed to this vital line of communication and coordination since its inception. As the Organization’s Secretary General, Abdalla Salem El-Badri, told delegates in his address to the IEF, everything pointed to the need to “continually enhance dialogue and cooperation, with innovative thinking, collaboration and swift action among stakeholders, where and when appropriate.”

It is a proven recipe for success, but one that needs the participation of all the oil industry’s main actors. In an increasingly interdependent world, no one can afford to go it alone.

And while on the subject of future success, we would like to take this opportunity to pay tribute to four of our Member Countries — Algeria, Ecuador, Iran and Nigeria — who have made it to the World Cup finals. Getting to Brazil in June is a major achievement in itself. We wish them the very best of luck in the competition.

OPEC Bulletin May 2014

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