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21

OPEC bulletin 11/17

Noureddine Boutarfa

Former Minister of Energy, Algeria

In Algiers in September last year, the OPEC Conference opted

for an OPEC-14 production target ranging between 32.5 and

33.0 million barrels/day, in order bring the market rebalanc-

ing forward. How significant was this decision to what subse-

quently followed?

The informal OPEC meeting held on September 28, 2016 — which

then turned into an Extraordinary Meeting of the Conference — is

of exceptional importance in the history of the Organization. It is

necessary to recall the situation of the Organization at that point

in time. The period was characterized by a continuous increase in

United States shale oil; the probability of an upcoming agreement

on IR Iran’s nuclear programme, which would open up new pros-

pects for Iran in terms of oil production; and the war against ter-

rorism by the Iraqi government, which required significant finan-

cial resources, necessitating that Iraq continuously increase its

oil production. This situation prompted a few members of the

Organization to consider in November 2014 that action should be

taken to curb these upward trends, particularly those of the pro-

duction of US shale oil.

Between November 2014 and September 2016, it became

apparent that the situation with regard to supply and prices in the

oil market had not improved but rather deteriorated. Oil stocks were

at their highest and prices at their lowest. It was then essential to

take action to stabilize the oil market.

The efforts by OPEC and non-OPEC producers at the Doha I

meeting in February 2016 and the Doha II meeting in April 2016

were unsuccessful, as was the Meeting of the OPEC Conference in

June 2016, held in Vienna. OPECMembers could not find a common

thread but still sought a way out. The occasion of the 15

th

meeting

of the International Energy Forum (IEF), which was held in Algiers

in September 2016, allowed Member Countries to meet informally

in order to continue to analyze the situation of the oil market.

For Algeria, holding meetings on the side-lines of the IEF was

an opportunity to bring the points of view closer and to reach a

decision that would restore balance to the oil market. Thus, dur-

ing the weeks leading up to the meeting on September 28, 2016,

and after many trips, consultations were undertaken with several

Members Countries, as well as non-OPEC countries, to prepare for

this informal meeting.

In order to encourage decision-making, Algeria prepared several

scenarios, including a freeze in OPEC’s output at 32.6m b/d. Many

serious matters were discussed at the meeting of September 28,

which were held in a good atmosphere and against the backdrop

of serene weather, all propitious to decision-making and reflecting

the willingness of Member Countries to converge around a solution.

This is how, during the course of this informal meeting of

Member Countries, which was not intended initially to result in a

decision, it was turned into the 170

th

(Extraordinary) Meeting of the

Conference, and resulted in what we call today the ‘Algiers Accord’.

Through this, OPEC not only recovered unity, a common voice and

shared objective, but also a willingness to propose and cooperate,

and to institute and broaden the dialogue with non-OPEC countries,

which was further supported by a joint declaration of energy coop-

eration by Russia and Saudi Arabia on September 5, 2016.

In order to ensure success for the next steps, a High-level

Committee was set up, as well as an implementation mechanism

for the Algiers Accord and a framework of consultation with non-

OPEC countries. We were aware that the issue of determining each

country’s production levels was going to be difficult. However,

the fact that the High-level Committee was mandated to only con-

sider the range of the overall production level (32.5–33.0m b/d)

enabled participants to avoid discussing the multiple scenarios

of the overall level of production and focus on the issue of indi-

vidual production levels instead. In other words, if this global

level of production had not been set in Algiers on September 28,

it would have been unlikely to define the levels of production by

country within the time limits and before the OPEC Conference of

November 30.

Noureddine Boutarfa.