The road taken

OPEC Bulletin Commentary August-September 2018

The ‘poetic voice’ of man is not one commonly associated with the global political economy, economic activities or the oil industry. But often it reveals ‘truths’ that other modes of expression are unable to transmit — and one of those truths is that all spheres of human activity emerge from a fundamental reality — which is that all great achievements are forged on the basis of patient teamwork, loving friendship and the common brotherhood of man.

This particular truth is one that was on display when agreement was reached by clear-headed representatives participating in the historic and landmark ‘Declaration of Cooperation’ of 10 December 2016. It was also on display, however, months earlier, in September, when Ministers and other officials gathered in the “pearl of Africa”, Algeria, for discussions and focused negotiations.

Although the focus was certainly not poetry, the broad, creative consultative efforts made there represented the first stage of a process that would eventually lead to the creation of the Declaration. This first stage was encapsulated in what became known as the ‘Algiers Accord’.

This month, we mark two years since that outcome and that gathering in the Algerian capital, which began with the 15th IEF Ministerial Meeting and ended with the 170th OPEC (Extraordinary) Conference. At the time, in these pages, we had celebrated that achievement, calling it an “encouraging, optimistic, and positive sign for the oil markets.” In fact, the ‘Algiers Accord’ was the first OPEC agreement since the decision made at the 151st (Extraordinary) Meeting of the Conference in Oran, Algeria, in December 2008.

But the ‘Algiers Accord’ was not only praise-worthy because of the production adjustments which it proposed. It was also a reflection of deeply important work behind the scenes — which included teamwork, friendship and the emergence of a consensus among OPEC Member Countries and their various officials and representatives. It was the culmination of an extensive consultative process undertaken collectively by OPEC Ministers and top officials, including some key non-OPEC countries.

As we have noted, the decision arrived at in Algiers pointed the way forward, culminating in the Declaration. But it also signaled an important shift in attitudes. It marked the beginning of a phase of broad OPEC and non-OPEC collaboration that continues to this day. While it is certainly true that “dialogue” between producers and consumers — and the rhetoric revolving around “collaboration” and “cooperation” between OPEC and other oil producers around the world — which has been common currency at international industry fora for years, it was in late 2016 when such words acquired greater power and credibility, becoming actions.

As if to prove the point, the ‘Algiers Accord’ was readily welcomed by stakeholders around the world, all of whom were concerned with the low price environment which then afflicted the market. It expressed a collective understanding that the market downturn was severe and detrimental to all stakeholders, and that “focused negotiations” were relevant and necessary in order to emerge from that cycle of volatility of 2014–16. It also reflected a growing agreement that OPEC’s leadership and decisions were absolutely necessary to respond to this challenge.

What’s more, it is clear now in retrospect that dialogue, friendship and brotherly teamwork were in themselves necessary for that leadership and decision-making to work. OPEC has, for many years now, regularly called for similar enhanced dialogue and cooperation with other producers. And OPEC has certainly engaged in dialogue with other committed energy stakeholders — such as the EU, Russia, India and China. But the ‘Algiers Accord’ brought things to a whole other level, marking a new level of compromise and commitment — one that has inspired other non-OPEC oil producing countries.

OPEC is known, of course, for the extensive reserves of its Member Countries. However, the Organization’s greater strength may actually be its global reach, its membership diversity, and the brotherhood and camaraderie that increasingly characterize relations among its many officials and delegations. Today, this extends also to those other oil producing countries which have chosen to participate in the ‘Declaration of Cooperation’.

As we mark the 2nd Anniversary of the ‘Algiers Accord’ which inaugurated the process that led to that Declaration, it would be well to recall that at the time, some observers had been skeptical about the possibility — and effectiveness — of such actions and decisions, and about their very durability. OPEC, however, had no such qualms — and chose, with the determination and confidence that only comes from having strong convictions, to follow another path, a new road. As the famed poet Robert Frost wrote in 1916, “Two roads diverged in a wood, and I—/I took the one less traveled by, / And that has made all the difference.” This is what we celebrate.

OPEC Bulletin August-September 2018

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