Keynote Speech by OPEC Secretary General at the Algeria Future Energy Summit

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the Algeria Future Energy Summit, 29 October 2018, Algiers, Algeria.

Excellencies, distinguished guests, ladies and gentlemen:

I have the distinct pleasure – and possibly the challenge – of speaking to you after a sumptuous lunch, courtesy of our friends at ENI.

Before I begin, I would like to recognize Abdelmoumen Ould Kaddour, CEO of Sonatrach, whose warm words of welcome this morning were highly appreciated.

Likewise, the keynote speech of the Prime Minister, HE Ahmed Ouyahia, which followed was congenial, evoking the unique greatness of this country, which I’ve had the pleasure of visiting several times.

As the largest country in Africa – and the 10th largest in the world – Algeria commands attention.  Its dynamic growth and transformation over the years is the result of a rich culture and a diverse people.  In addition, its struggle for independence and its historic resistance to the status quo have forged a resilient and ever progressive people.

Much of this, however, would not have been possible without leadership – and a statesman who has been courageous, indefatigable and visionary: President Abdelaziz Bouteflika.

I think a round of applause in appreciation of his lifelong commitment would be in order.

Ladies and gentlemen,

Allow me to briefly mention a few facts that underscore Algeria’s growing importance as an oil and gas producer.

Since the first commercial oil was discovered here in 1956, the country has become a global hydrocarbons ‘powerhouse’.  It now not only plays a leading role in the region but on the global scene as well.

With more than 200 oil and gas fields in production, Algeria’s proven oil reserves put it among the top three African countries.  It is also ranked the third-largest oil producer in Africa and is the Continent’s largest natural gas producer.

In worldwide terms, Algeria is the 17th largest oil producer and 10th largest gas producer, with more than 60% of its oil and gas exported.

In OPEC, too, Algeria continues to play a key role.  Since it first joined the Organization in 1969, it has been a stalwart.

In 1975, its capital of Algiers even played host to the 1st Summit of Heads of State and Government of OPEC Member Countries, one of only three such Summits.

In recent years, too, the country has made other important contributions to OPEC’s work.

At the onset of the last global financial crisis in 2008, Algeria hosted the landmark Meeting of the Conference leading to the Oran Decision, which saw the Organization downwardly adjust production in a moment of pronounced market volatility.

More recently, Algeria’s courageous leadership and unflagging advocacy of the ‘Declaration of Cooperation’ in late 2016 has been well documented and fully acknowledged by OPEC, non-OPEC producers and the global community.

In fact, last month, during meetings of the JTC and JMMC here in Algiers, we commemorated the Second Anniversary of the ‘Algiers Accord’, which was the first step on the road leading to that Declaration.

To mark the occasion, OPEC even produced a Special Editionof the OPEC Bulletin, paying tribute to the country and its leadership.

Since then, Algeria has continued to provide support for ongoing consultations among OPEC and non-OPEC producers, which has resulted in a marked transformation in global energy relations on several levels.

First, there is OPEC’s global role.

Though some sceptics have imagined a diminished global role for the Organization, OPEC has instead demonstrated permanence and longevity.  It has been transformed.

To paraphrase a famous 19th century humourist, “reports of our demise have been greatly exaggerated.”

In this process of transformation, OPEC has not only acquired a new image but has shown that it can adapt like the most nimble of corporations.

Whether one admits it or not, OPEC has taken centre stage – probably more than at any other time in its history.

There are also ongoing transformations at the level of OPEC’s Member Countries.  Many of them have implemented important sectoral reforms over the years, which have helped them navigate through the industry downturn while also positioning them on a path of sustainable growth.

In some countries, the energy mix has diversified.  In others, the application of technological innovations has become more pronounced.

Other reforms have sought to encourage investments, which remains an important industry priority.

Ladies and gentlemen,

Algeria is no stranger to such transformations.  Continuous reforms have produced important changes in the country – and in this, it is necessary to once again recognize the extraordinary role played by HE President Bouteflika.

He has been a ‘catalyst of change’, spurring modernization, implementing reforms and even pushing forward – in a courageous and innovative manner – with the “national reconciliation” in the early 2000s.

Leadership at the country’s Ministerial levels has been similarly laudable.  I would be remiss if I failed to mention the dedicated men and women of Algeria that have worked with OPEC over the years – beginning with supremely capable, high-level officials like the Minister of Energy, HE Mustapha Guitouni, whose character, commitment and quality know few parallels.  Mustapha Guitouni is a technocrat par excellence – and an epitome of humility.

In addition, it is worth mentioning the efforts the country has made in the area of human resources, particularly for the oil and gas industry.  Recognizing the key importance of human capital, Algeria has pursued innovative educational reforms and new training opportunities over the years.

The results of this and other reforms speak for themselves.  Algeria today not only demonstrates oil and gas prowess but counts with an electrical grid that is almost at 100% coverage and its natural gas network provides more than 60% of household coverage.  A round of applause for this technocrat par excellence, champion of combating energy poverty, Mustapha Guitouni !!!

From OPEC’s perspective, continuous reforms are at the heart of the growth and evolution of our Member Countries. – They are also at the core of the transformation of NOCs like Sonatrach.

Reforms have facilitated the expansion of the oil and gas industry in Member Countries, allowing them to meet national yearnings and aspirations, while meeting the needs of the industry and consumers worldwide.

It is important to appreciate how far the industry has come.  From the drilling of the first commercial oil well in Baku, Azerbaijan in 1846 to the first North American oil well – in Titusville, Pennsylvania – in 1859, innovation and reform, anchored in the application of technology, have consistently driven the industry’s growth.

Innovations and reforms also helped to transform John D. Rockefeller’s Standard Oil Company – originally formed in 1865 – so that by 1879 it controlled 90% of America’s refining capacity, as well as its pipelines.

Later, other reforms and innovations led to the Spindletop discovery in 1901, which sparked the Texas Oil Boom.

Meanwhile, in Europe in 1876, Ludwig and Robert Nobel had set up Nobel Brothers Petroleum Company, while the Rothschild family had production and refining capacity in Russia, all driven by innovations, reforms and rapid change.

Similarly, Royal Dutch Petroleum, which had begun operations in the East Indies in the late 1800s, rapidly adopted new technologies and pursued reforms – so that by 1892 it had integrated production, pipeline and refining operations.

By the 1930s, when several IOCs discovered major deposits in the Middle East and North Africa, another stage in the industry’s transformation began to take place, with the eventual appearance of the ‘Seven Sisters’.

The dominance of the ‘Seven Sisters’ coincided with the emergence of new movements around the world – particularly in producing countries like Algeria.

As they implemented new reforms and more boldly asserted their sovereign rights, their cause was increasingly recognized.  Important stakeholders even expressed their solidarity, with legendary Enrico Mattei, founder of ENI, publicly supporting the independence of Algeria, promoting strategic partnerships with newly emerging countries.

Subsequent developments, the expansion of the industry and reforms in producing countries led to an assertion of their sovereign rights.  The outcome was, of course, the 1960 founding of OPEC.  The rest, as they say, is history.

The history of oil abounds with similar examples of innovation and change, reforms and transformation.  A key outcome of this trajectory was the establishment of the NOCs.  Their evolution and growth has been truly remarkable.

In the early days, NOCs were monolithic entities that necessarily had to juggle various roles – not just in commercial operations but also in the emergent policies and regulations overseeing the energy sector.  These were heavy and rather conflicting mandates, but quite understandable in their formative ages.

Over the years, however, as each Member Country and NOC pursued internal reforms, they were able to separate these three conflicting roles, allowing them to evolve into sophisticated, competitive corporations.

Today NOCs are not only key players in their own domains but have ventured out abroad – going past their national borders and beyond their territories.  Today they compete internationally with both IOCs and other NOCs – and have become successful INOCs.

The history of Sonatrach – originally founded in 1963 and a proud co-organizer of this Summit – epitomizes such a transformation.  With state ministries now handling energy policies, and authorities such as ALNAFT and ARH overseeing regulations, Sonatrach has been able to increasingly focus on its core mission – which is commercial operations.

This has allowed it to grow into a successful INOC and become the largest oil company on the African Continent.

A well-integrated oil and gas leader, Sonatrach’s extensive activities are well in accordance with the best of international practices.  Its investment portfolio today includes upstream and downstream projects in Africa, Europe and Latin America.

Already the third-largest gas supplier to EU, Sonatrach counts with three international export pipelines and two LNG terminals, as well as domestic shale exploration deals and a refinery in Italy.

A product of a relentless reform-driven process of evolution and transformation, Sonatrach has wisely continued to pursue reforms in support of innovation and growth.

Its recently announced “Project 2030” – or “SH2030” – sets out a long-term strategy, which envisions an expanded global role.

Investments remain a priority.  SH2030 is closely tied to attracting capital into the country, while achieving closer cooperation with IOCs.  It also seeks to invest abroad, as one of the priorities of its vertical integration and diversification.

One specific objective is creating $67 billion in additional revenue by 2030 (50% of which will be reinvested).

This couldn’t come at a more opportune time, since countries like Algeria and the industry in general were impacted by the 2015-2016 contraction in investments.

SH2030 thus comprises a ‘turning point’ for the company.  It extends Sonatrach’s ongoing evolution into the future, and seeks to produce an efficient, flexible and robust organization for the benefit of Algeria, OPEC and the industry.

Ladies and gentlemen,

It is clear that there is much to say about our country host, the ‘Pearl of Africa’, Algeria.  But time is a precious resource, too, so I will conclude with a few final statements.

Continuous reforms have driven the industry’s most important developments.  They have kept companies ‘on course’, and ensured their growth and success.

At the same time, ongoing changes have produced new relationships and priorities among Member Countries.  The competitive relationship among the world’s oil producers have softened, and relationships between OPEC and some non-OPEC countries have become more collaborative and dialogue-driven.

This has been well demonstrated at all levels – ministerial, corporate and academic – as seen recently at the OPEC International Seminar in June, in Vienna.

There has also been a positive change in OPEC’s image and the way it is perceived.  Amid increased focus and attention on OPEC, it is generally acknowledged that the face of the Organization has changed – and that it has taken distinct steps in the interest of the industry and the world economy.

OPEC, in short, has become an indispensable ‘organ of stability’ in the oil market – continuously breaking new frontiers and establishing energy dialogues with the EU, Russia, China, India and the US.

In this same spirit of openness, OPEC continues to share with all and sundry its data and reports, online, free of charge.  Our annual World Oil Outlook (WOO), our Monthly Oil Market Report (MOMR) and our Annual Statistical Bulletin (ASB) are all accessible through digital ‘apps’ – the first time in the industry!

Increased collaboration and openness like this across all fronts seem to be the order of the day.  Amid these and other changes, Algeria has continued to show us leadership and courage.  This should be recognized – and it should be emulated and continued.

May the spirit of the ‘Pearl of Africa’ – the land of the 1.5 million Heroic Martyrs, the land of Abdelaziz Bouteflika– continue to spur our industry and OPEC to greater heights!

Thank you for your attention.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General