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27

OPEC bulletin 3–4/17

the OPEC Conference opted for an OPEC production target ranging

between 32.5 and 33m b/d, in order to bring the market rebalanc-

ing forward,” he said.

Barkindo said the focus and preoccupation was the unprec-

edented build-up of inventories over the period 2015–16 that

dislocated oil market fundamentals and sent oil prices plunging

by as much as 80 per cent. “The Algiers decision was a landmark

achievement for the Organization and the industry and I recall the

optimism portrayed by Khalid Al-Falih, Saudi Arabia’s Minister of

Energy, Industry and Mineral Resources, who was speaking at the

same October conference. However, I recall that in some quarters

doubts were raised about whether OPEC could actually implement

the Algiers decision in a full and timely manner.”

He said scepticism was also voiced loudly about the ability of

OPEC to bring non-OPEC producers onboard, following the deci-

sion in Algiers to develop a framework of high-level consultations

between OPEC and non-OPEC countries. “Despite this pessimism,

OPEC embarked on the most extensive consultations among OPEC

Member Countries and between OPEC and non-OPEC producing

nations. At the same time, we also undertook deliberations with

the broader international community and other multilateral organ-

izations to further build consensus about the strategic urgency of

restoring sustainable oil market stability.”

Barkindo said the intervening period between the Algiers deci-

sion and the Vienna decision on November 30 was no doubt one

of the most challenging and intense periods in recent oil industry

price cycles.

“The shuttle diplomacy that was undertaken across the world

and the encouraging and consistent advocacy in a variety of inter-

national energy platforms and fora, facilitated consensus and

commitment.”

This, he said, was crucial in the adoption of the Vienna

decision at the 171

st

Meeting of the OPEC Conference and

the ‘Declaration of Cooperation’ with non-OPEC countries on

December 10.

“For the first time in the history of the industry, 13 OPEC nations

and 11 non-OPEC participating countries, led by the Russian

Federation, came together to help rescue and stabilize this strate-

gic global industry — one that has been vital to the development

of modern civilization.

“To achieve this historic feat, our Heads of State and

Government, Ministers, Ambassadors, and many officials from the

24 participating countries — both individually and collectively —

played decisive roles in the run-up to these landmark decisions.”

The OPEC Secretary General said that through a shared vision,

among bothOPECand non-OPECproducers, collaborative and timely

intervention was taken to address the prevailing market realities.

“It was a commitment to all oil industry stakeholders, both

producers and consumers, as well as one to the broader global

community, through the restoration of oil market stability and the

potential positives of this for the global economy.”

To implement these timely decisions, Barkindo explained that

a Joint Ministerial Monitoring Committee (JMMC) was also estab-

lished, which met for the first time in Vienna on January 22.

He said the adoption of the framework for oversight and moni-

toring implementation, which involved a Joint Technical sub-Com-

mittee, was both innovative and unique.

The OPEC Secretary General said the Organization was deter-

mined to realize the joint conference decision to strengthen and

sustain the OPEC/non-OPEC cooperation already established.

“We want this to be a lasting and flexible partnership that when

necessary can help reduce volatility, provide more confidence to

the market, and steer a path towards more sustainable stability.”

Barkindo said that, in the short term, it was expected that this

cooperation, alongside recent indications of some improving mac-

roeconomic conditions, would see the rebalancing process brought

forward and more stability returned to the market. I cannot over

stress how vital this is, not only to the industry, but the global econ-

omy too,” he affirmed. He said it was evident in the last quarter

of 2016 that total OECD commercial oil stocks were falling and it

was expected that there would be a further drop during 2017, as a

result of the decisions taken.

“We will continue to focus on the level of inventory drawdown to

bring the level closer to the five-year industry average. These deci-

sions should also mean that prices stabilize at levels that are more

conducive to the kind of investments the industry needs, specifi-

cally by lessening the financial and operational stresses for com-

panies and reducing the pressure to cancel or postpone planned

projects. We believe as the market rebalances the price will find its

equilibrium,” said Barkindo.

Elaborating on the future, he said there were still many other

challenges for the oil markets to deal with, including the prospects

for the global economy; excessive speculation and the role of finan-

cial markets; the impact of geopolitics; advances in technology and

their impacts on exploration and production; policy uncertainties

in a number of leading producing and consuming countries; and

environmental and sustainable development concerns.

Martin Gammon for Energy Institute

Mohammad

Sanusi

Barkindo,

OPEC

Secretary

General.