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15

OPEC bulletin 3–4/17

CERAWeek 2017

in the first part of this decade before suffering signif-

icant upheaval during the oil market downturn of the

last couple of years.

Some commentators have until recently labelled the

relationship between OPEC and the North American inde-

pendent tight oil operators as a ‘battle of wills’, while oth-

ers have gone as far as calling it a ‘war’. These types of

comments were certainly overblown, with OPEC over the

years often emphasizing the importance of the efficient

production of tight oil for the global marketplace. While

in Houston, this was re-emphasized by Barkindo, who

highlighted creativity, operational skills and the mana-

gerial ingenuity of these companies, as well as the value

and importance of tight oil growth to the global economy

in terms of helping meet oil demand growth during the

early part of this decade.

What had been missing in the past, however, was a

dialogue or communication channel so that OPEC could

better understand the perspectives of North American

independents and vice versa. At CERAWeek 2017 this

was addressed, with a couple of significant high-level

get-togethers between OPEC and US oil industry CEOs,

leaders and innovators that allowed these key industry

stakeholders to informally engage.

Barkindo called themeetings “historic”, and stressed

that “we all belong to the same industry, we have all felt

the brunt of the volatility the market has experienced over

the past two years or so and we all want to see the resto-

ration of stability.” He said that with confidence return-

ing to the industry and given the fact that “oil will be a

major source of energy for the foreseeable future,” it is

vital to better understand the viewpoints of all industry

stakeholders.

He added that these producers did not need to be

persuaded to discuss the challenges and opportunities

facing the oil industry, particularly given that the US tight

oil sector had lost around 1m b/d in production over the

past year or so, with many job losses and many com-

panies in distress. He said that “no-one wants to see a

repeat of 2015 and 2016.”

The constructive and encouraging nature of the

talks was exemplified in some of the positive post-meet-

ing comments regarding OPEC’s outreach from those

North American independents present. Speaking to

Bloomberg, John Hess, CEO of Hess, said: “It was a very

good exchange of information and views about oil … I

really commend the OPEC Secretary General for the out-

reach. It was a good talk.”

Scott Sheffield, Executive Chairman of the Board

of Pioneer Natural Resources, also in comments to

Bloomberg, said: “I am seeing a series of meetings

where OPEC is reaching out and spending more time

with US independents than I have seen over my entire

career.”

Mohammad Sanusi Barkino (c),

OPEC Secretary General; with Dr

Fatih Birol (r), Executive Director

of the International Energy

Agency (IEA); and Daniel Yergin

(l), Vice Chairman, IHS Markit,

and Chairman of CERAWeek.