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9

OPEC bulletin 11/17

Cooperation’. Eleven non-OPEC producers sat down

with OPEC Member Countries in the Austrian capital on

that day and agreed to a combined output reduction of

around 600,000 b/d.

This amount, added to the 1.2m b/d output reduc-

tion already decided upon by OPEC at its 171

st

Ordinary

Meeting of the Conference, meant that, from the begin-

ning of 2017, some 24 of the world’s oil producers would

implement joint reductions totalling nearly 1.8m b/d,

which would ease the oversupply in the market.

The ‘Declaration of Cooperation’

The supply glut, followed by a growing stock overhang,

had been pressuring the market and prices. The wel-

come OPEC/non-OPEC agreement marked a turning point

after months of discussion and deliberation, particularly

between OPEC and the Russian Federation.

The OPEC/non-OPEC Ministerial Meeting was jointly

chaired by Dr Mohammed Bin Saleh Al-Sada, President of

the OPEC Conference and Minister of Energy and Industry

of Qatar, and Alexander Novak, Minister of Energy of the

Russian Federation.

Assembledministers took into account the current oil

market conditions and short- to medium-term prospects

and recognized the need for joint cooperation of oil-ex-

porting countries, “to achieve lasting stability in the oil

market in the interest of oil producers and consumers.”

It also underscored the importance of other oil produc-

ing countries joining in efforts.

A

communiqué

issued at the end of the meeting

importantly stressed that participants recalled the rights

of peoples and nations to permanent sovereignty over

their natural wealth and resources. It thus took into

account the desire of Azerbaijan, the Kingdomof Bahrain,

Brunei Darussalam, Equatorial Guinea, Kazakhstan,

Malaysia, Mexico, the Sultanate of Oman, the Russian

Federation, the Republic of Sudan, and the Republic of

South Sudan, as well as other non-OPEC producers, to

achieve oil market stability in the interest of all oil pro-

ducers and consumers.

Joint Ministerial Monitoring Committee

Along with the production reduction, the

communiqué

added that three OPEC Members and two participat-

ing non-OPEC countries would join a Joint Ministerial

Monitoring Committee (JMMC), and they would be

assisted by the OPEC Secretariat.

It additionally stated that cooperation should be

strengthened, including through joint analyses and out-

looks, with a view to ensuring a sustainable oil market for

the benefit of producers and consumers, and that there

should be regular reviews at the technical andministerial

levels on the status of this cooperation, thus building a

framework for ongoing cooperation.

The JMMC’s first meeting was scheduled for January

22, 2017. To support the JMMC, a Joint Technical

Committee (JTC) was also formed, which is responsible

for preparing a monthly production data report on the

crude oil production of OPECMember Countries and par-

ticipating non-OPEC for use during the JMMC meetings.

In this way, the JMMC can provide some oversight as to

the levels of conformity to the production adjustments

that had been agreed upon.

To date, there have been five meetings of the JMMC,

with the fifth one taking place September 22, 2017, and

the sixth meeting scheduled for November 29, 2017.

Conformity levels to the production adjustments have

been consistently high throughout the year, reaching up

to and sometimes beyond 100 per cent. At the 5

th

Meeting

of the Joint Ministerial Monitoring Committee in Vienna,

August reached a remarkable overall conformity level of

116 per cent. This has sent a strong positive message to

the market and investment has slowly started to come

back.

Concrete results

At just over nine months into the ‘Declaration of

Cooperation’, the rebalancing process is well underway,

though it has not always been a smooth path. The cur-

rent oil market cycle first had to be contained and then

alleviated, which has required great perseverance. After

stemming the industry’s losses, momentumwas required

to move the market once again in a forward direction.

Implementation of a

production adjustment

1.8 million barrels/day

effective from January 1, 2017

1.8mb/d