Dialogue is alive and well

OPEC Bulletin Commentary October 2017

In an increasingly globalized, complex and interdependent energy industry, dialogue has become essential for any stakeholder to accomplish its goals. In times such as these, no one can go the distance alone.

OPEC has been at the forefront of international energy dialogue since the early 1990s, when it joined forces with the International Energy Agency to begin a platform for producer-consumer dialogue through the establishment of the International Energy Forum (IEF).

Since its founding in July of 1991 in Paris, the IEF has evolved to become the world’s preeminent venue for dialogue between global oil and gas producing and consuming countries.

Today, its 72 Member Countries, representing all six continents, encompass nearly 90 per cent of global supply and demand for oil and gas. Its membership has expanded over the years to include transit states and other producers such as Argentina, China, India, Mexico, Russia and South Africa.

OPEC continues to play a leading role in the IEF’s biennial Ministerial Meetings, which host the world’s largest gathering of energy ministers.

In the years since the IEF was founded, OPEC has expanded its dialogue activities to include platforms with the European Union, the Russian Federation, and more recently, Japan, India, China and the United States.

Additionally, since 2016, intensified dialogue between OPEC and non-OPEC producing countries culminated in the historic ‘Declaration of Cooperation’, in which 24 producers came together to help rescue the oil market from one of the worst downturns in history, when the oil price plummeted by nearly 80 per cent in mid-2014.

This month, OPEC’s dialogue efforts were in full swing as the Secretary General spoke in several of the world’s capitals to promote lasting stability in the world oil market.

In Russia, on October 3, he shared a panel with President, Vladimir Putin, during the country’s premier oil and gas event — Russian Energy Week.

Both leaders made comments emphasizing the ongoing importance of dialogue in the industry.

President Putin noted that the landmark OPEC and non-OPEC cooperation, in which Russia has played a key role, was helping restore stability to the oil market and providing benefits to the world economy.

“Everyone is interested in a stable market,” he said. “What we did with OPEC, I believe, is beneficial for all the global economy.”

The Secretary General, in his remarks, noted the important role of dialogue in increasing transparency and reducing volatility.

“Through our dialogues and cooperation, we can lessen the hills and valleys of high volatility which create instability in the market and risks for future investment,” he stated. “While some ups and downs are endemic to the oil industry, we can certainly lessen their impact by sharing information and moving towards a common goal.”

A week later, the Secretary General was in New Delhi to take part in the first-ever India Energy Forum. Again here, he underlined the prominent role of dialogue between OPEC and one of the world’s largest consumers.

“This premier energy forum marks a new stage in the growing strategic relationship between OPEC and India, and builds on previous meetings and interactions that we have had so far,” he said. “My friend, Honourable Minister Pradhan, reminded me on Sunday, during our OPEC-India bilateral meeting, that within less than a year, we have already met five times. The dialogue between OPEC and India — the relationship that we celebrate here today — is rather unique given India’s role as one of the most dynamic countries in the world.”

Before the end of the year, OPEC will engage in at least two more high-level dialogues with the European Union and China.

OPEC has also initiated a new era of dialogue with the United States, which began last December when an OPEC delegation, led by the Secretary General, held a series of high-profile meetings in Washington, DC and New York City.

The week-long itinerary included meetings at the International Monetary Fund, the US Energy Information Administration, the Centre for Strategic and International Studies (CSIS), the US Commodity Futures Trading Commission, Columbia University and IHS Markit.

During remarks delivered at CSIS on December 13, 2016, the Secretary General extended an invitation for the US to join OPEC’s portfolio of international dialogue initiatives.

“We hope now that the United States will join us for a new era of collaboration and dialogue, so that we can work together towards our mutually beneficial goal of ensuring stability in the world energy markets,” he said. “These conditions will contribute to economic growth and prosperity, two things we all desire for this and future generations.”

During this month’s India event, the Secretary General reinforced this message, urging producers in the US to join the collaborative efforts currently being made by OPEC and non-OPEC producers to rebalance the global oil market.

“We urge our friends in the shale basins of North America to take this shared responsibility with all seriousness it deserves, as one of the key lessons learnt from the current unique supply-driven cycle,” he stated.

Only time will tell as to how the US oil industry might respond to this open invitation. One thing is certain, though: OPEC’s long history of dialogue and cooperation, which is alive and well today, is bearing fruit and bringing us closer to a healthy, stable and sustainable global oil market.

OPEC Bulletin October 2017

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