Dialogue — getting to grips with the crisis

OPEC Bulletin Commentary February 2009

There is little to smile about these days for the oil industry, which has been hit hard by the protracted financial crisis and deepening world recession.

However, if there has been one chink of light to emerge from the end of a very long tunnel, this can be found in the increased willingness of decision-makers the world over to talk frankly and openly with each other, as they come to terms with the recent chaotic reshaping of the global economic landscape.

While it is all too easy to find comparisons with past events, there is also the reality of venturing into a large area of uncharted territory. Indeed, no two crises are ever the same. This is especially true of today’s high-tech, fast-moving, globalized world, characterized by dynamic emerging economies and rising interdependence. There has been nothing like it in the past.

For the oil sector, OPEC has long been a strong advocate of frank, open dialogue in the international oil market.

The very formation of OPEC, almost half a century ago, saw its first big step in this direction. In the 1980s, OPEC called upon non-OPEC producers repeatedly to support its efforts in stabilizing the oil market, as oil prices weakened and collapsed. Real progress there paved the way for dialogue to be extended to include consumers in the early 1990s, and OPEC has been at the centre of breakthroughs in this area since then.

Few would dispute the need to prioritize the pressing issues of the day in times of crisis — thus we have seen, for the global economy, the persistent efforts by governments and business to cope with the endless financial turmoil, and, within the confines of the oil sector, the carefully conceived measures taken by OPEC to support the faltering price structure.

At the same time, however, one must continue to address the longer-term challenges. Every crisis has an end, even if the timing and outcomes vary. And yet the fundamental long-term challenges remain and must ride the waves of the intervening crises, however stormy the seas.

In OPEC, we keep trying to find the right balance between often conflicting challenges along uneven time-lines, to bring about sustainable order and stability in the oil market, in a way that is mutually beneficial to producers and consumers, both today and in the future. And, in doing so, we seek input from other stakeholders in the industry.

March 2009 is a case in point. This will be a big month for OPEC.

On March 15, the OPEC Conference will take a long hard look at the market outlook for the coming months, seeking to anticipate developments that could occur during this period. The Organization’s Oil and Energy Ministers will also be reviewing the impact of current price levels on investment plans for the longer term, in the hope of avoiding future boom/bust cycles.

Three days later, the Fourth OPEC International Seminar, entitled ‘Petroleum: future stability and sustainability’, will open at the historic Hofburg Palace in Vienna, attracting the cream of energy decision-makers and experts from across the globe. The participants will examine a wide range of energy and related issues affecting both the present and the future, to gain valuable insights into the challenges facing the industry in the coming years.

Whether the industry will have more to smile about at the end of this busy week is difficult to say. Let us hope so.

But, if the frank exchanges of informed views make for the emergence of a brighter light at the end of the tunnel for the industry, or even shortens the tunnel, then clearly our efforts will have been worthwhile in providing this opportunity for discourse and insightful reflection.

This Commentary is taken from the February 2009 edition of the OPEC Bulletin, which can be downloaded free of charge in PDF format from the OPEC website.

OPEC Bulletin (February 2009)

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