OPEC Secretary General participates in CERAWeek 2017

OPEC Secretary General, HE Mohammad Sanusi Barkindo, was Tuesday (March 7) joined by the Executive Director of the International Energy Agency (IEA), Dr. Fatih Birol, in a two-man plenary session at the CERAWeek 2017 in Houston.  The energy dialogue was moderated by Daniel Yergin Vice Chairman, IHS Markit, and Chairman of CERAWeek.

The conversation began with the Secretary General contrasting the change in industry sentiment at the 2017 conference, compared to CERAWeek 2016.  He believed that it was essential to maintain the mounting industry confidence, and in this regard, he highlighted the importance of the 2016 landmark decisions – the ‘Algiers Accord’, the ‘Vienna Agreement’ and the Declaration of Cooperation with some non-OPEC producers – aimed at drawing down the large stock overhang and quickening the market rebalancing process.

To date, conformity with the voluntary production adjustments had been encouraging, the Secretary General said, but added that all participating countries should aim for 100% conformity.

Dr. Birol stated that returning oil market stability had seen investments rebound in the US tight oil sector, but stressed that global investments needed to resume at a much higher level so as to ensure that supply growth does not  stall by 2020.  The Executive Director noted that the downturn in investments in 2015 and 2016 was unprecedented for the industry.

The Secretary General concurred, and acknowledged that it was essential that investors also looked to sustainable long-cycle project investments, to complement those currently being made in short-cycle projects.

The two Heads of OPEC and the IEA also agreed that they did not see an oil demand peak for the foreseeable future.  Demand remained robust, said the Secretary General.  He highlighted figures in OPEC’s World Oil Outlook 2016, which sees world oil demand increasing by around 17 million barrels a day between 2015 and 2040, with oil-related investment requirements of $10 trillion over this period.

Whilst at CERAWeek 2017, the Secretary General participated in a meeting with HE Khalid A. Al-Falih, Saudi Arabia’s Minister of Energy, Industry & Mineral Resources and President of the OPEC Conference, HE Jabbar Ali Hussein Al-Luiebi, Iraq’s Minister of Oil, Alexander Novak, Minister of Energy of the Russian Federation, and Aldo Flores-Quiroga, Deputy Secretary of Energy for Hydrocarbons, Mexico.

The five oil chiefs held a press conference following the meeting, where they reiterated their commitment to the full and timely implementation of the decisions taken by OPEC and non-OPEC in 2016 in a fair and equitable manner.

The Secretary General and an OPEC delegation also attended a pre-CERAWeek 2017 get together US oil industry Chief Executive Officers (CEOs), leaders and innovators, particularly those from the tight oil sector.  The event was hosted by Bill White, Chairman of Lazard Houston.  During the CERAWeek event, the OPEC delegation also attended another gathering with other CEOs of North American independent operators, organized by IHS Markit.

Discussions focused on the current oil market environment, from the supply and demand perspectives, as well as the challenges and opportunities facing the industry in the years ahead.

The historic meetings were an opportunity to informally engage with these key industry stakeholders, said Barkindo.  The constructive and encouraging nature of the talks was exemplified in some of the positive post-meeting comments regarding OPEC’s outreach from participating companies.

The Secretary General and the OPEC delegation also participated in an IHS Markit-organized meeting with leading actors from the financial and investment community.  It was an opportunity to exchange viewpoints and further explore the interactions between financial and physical markets.  The OPEC Secretariat will host an IEA-IEF-OPEC Workshop on this topic on March 16, 2017 in Vienna.

These meetings and workshops are part of the OPEC Secretariat’s focus on advancing an energy dialogue with key North American oil industry stakeholders.

The Secretary General held a bilateral meeting with Patricia Espinosa, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC).  The two discussed the importance of enhancing collaboration between OPEC and the UNFCCC, on such matters related to climate change, sustainable development and economic diversification.  The meeting further builds on the ongoing involvement of OPEC in climate change negotiations and the active participation of its Member Countries.

Talks between the Secretary General and senior oil industry executives took place throughout his attendance at CERAWeek 2017, with bilateral meetings held with Eldar Sætre, CEO, Statoil; John Hess, CEO, Hess Corp.; Darren Woods, Chairman & CEO, Exxon Mobil; José Antonio González Anaya, CEO, Pemex; Bob Dudley CEO, BP; and, Ryan Lance, Chairman & CEO, ConocoPhillips.  The meetings were an opportunity to discuss the major issues facing the global oil sector, in both the short- and long-term, as well as the energy sector more generally.

The Secretary General also met with representatives from the Center for Strategic and International Studies (CSIS) – Sarah Ladislaw, Director and Senior Fellow, Energy and National Security Program, Adam Sieminski, the James R. Schlesinger Chair for Energy and Geopolitics, and Frank A. Verrastro, Senior Vice President and Trustee Fellow.

CERAWeek by IHS Markit is one of the premier annual international gatherings of energy industry leaders, experts, government officials and policymakers, as well as leaders from the technology, financial, and industrial communities.  This year’s event marks the 36^th anniversary of the conference.

Following his attendance at CERAWeek 2017, the Secretary General travelled to Washington to participate in an Atlantic Council roundtable energy event on March 9.  The high-level policy gathering provided the opportunity for valuable interactions among oil companies and officials, leading international organizations in the field of energy, as well as prominent policymakers, including high-level officials from the new US Administration.