Remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the Austrian-Russian Friendship Society (ORFG), 19 November 2019, Vienna, Austria.

Good evening ladies and gentlemen,

It is both a pleasure and an inspiration to join you here in this splendid Palace that dates back to 1740 when Kaiser Franz Stephan von Lothringen purchased it. The Palace was used not only as his personal quarters, but also as a place to conduct diplomacy and exchange views on business and political affairs with his peers. The Kaiser had an avid interest in science, and thus had at his disposal a research library and a subterranean laboratory where he was able to carry out scientific experiments that gave birth to some commercial innovations. In addition, he had several rooms devoted to storing and displaying his collections, which, at that time, were collectively known as the Natural History Cabinet, and eventually expanded to form the basis of what was to become Vienna’s fabulous Natural History Museum.  

It is thus very apt that this beautiful building, full of world history, diplomacy and connections to the wider world, be the home base for the Austrian-Russian Friendship Society, which is in the business of building bridges between Austria and Russia, both diplomatically, commercially and culturally.

Allow me to thank Dr. Richard Schenz, President of ORFG and Florian Stermann, Secretary General, for their kind invitation for me to speak here this evening. I am impressed by the good work ORFG is doing here in Vienna to forge good relations between Russia and Austria. In reflecting on the mission of ORFG, it occurred to me that OPEC’s work on the international stage, in close cooperation with Russia, mirrors what you are doing here in Vienna. We are both helping promote cooperation and understanding through a spirit of respect and goodwill to achieve our mutual goals. And, as I will share with you this evening, this is an approach that is bearing fruit.

I would also like to acknowledge His Excellency, Dmitrij Ljubinskij, Ambassador of the Russian Federation to Austria, and thank him for his support for OPEC and our ongoing efforts with Russia through the Declaration of Cooperation. 

Ladies and gentlemen,

The timing of my participation here at ORFG is especially relevant as OPEC and Russia are at the forefront of an unprecedented era of international energy cooperation. 

This new era of which I speak was initiated three years ago after the global oil market had experienced one of its worst downturns in history. Between 2014 and 2016, bloated inventories reached 5.5 mb/d, surpassing oil demand growth of 4.1 mb/d. By July 2016, the OECD commercial stock overhang had soared to a record high of about 403 mb over the five-year industry average. This triggered a massive drop in the OPEC Reference Basket price, which fell by a devastating 80% between June 2014 and January 2016.

This situation brought our industry to its knees. Nearly a half of million people lost their jobs, an estimated one trillion dollars in investments were either frozen or deferred, and a record number of companies filed for bankruptcy. 

OPEC knew that the scale of this crisis required an urgent, coordinated response by all industry stakeholders to help reduce the massive stock overhang and rebalance the oil market.

Thus, a frenetic flurry of consultations between OPEC and other oil producers got underway. I spent the lion’s share of my time during this period in planes traversing the world’s regions and continents in an effort to rally support and help devise a rescue plan for the industry.

In February 2016, talks were initiated in Doha, Qatar between Venezuela, Saudi Arabia, Qatar and the Russian Federation. Follow-up discussions were held in Doha again in April 2016 between all OPEC Member Countries, except IR Iran, and Russia, Azerbaijan, Bahrain, Kazakhstan, Oman, Mexico and Trinidad and Tobago.

These critical consultations continued in the months to follow and eventually bore fruit on the 10^th of December 2016 with the signing of the Declaration of Cooperation between the OPEC Member Countries and 10 non-OPEC member countries, led by Russia. 

This courageous and proactive stance virtually rescued an industry that was caught in a downward spiral, thereby helping restore confidence not only in the oil market, but in the global economy in 2017 and 2018.

Over the last three years, the OPEC-Russia relationship has continued to flourish and reach new milestones throughout the implementation phase of the Declaration of Cooperation, in which Russia has been a key contributor as Co-Chair of the Joint Ministerial Monitoring Committee alongside the Kingdom of Saudi Arabia.

These common efforts of OPEC and its non-OPEC partners, led by Russia, have helped forge a lasting bond of trust and mutual respect. Together, we have literally cast a new blueprint for how to optimize our efforts an industry that has become increasingly complex and volatile. 

It is obvious that none of these monumental developments could have come to fruition if it weren’t for staunch support and leadership at the highest levels. In this regard, I must recognize the absolutely fundamental role played by the President of the Russian Federation, His Excellency Vladimir Putin, who has been a leading advocate of this endeavour. This support was evident when I had the opportunity to meet with HE President Putin on the sidelines of Russian Energy Week in Moscow last month. During our discussion, President Putin acknowledged the great success of the Declaration and Charter of Cooperation and pledged Russia’s ongoing support in the interest of producers and consumers. He also commended all participating countries for their ongoing commitment and contributions to sustainable stability in the global oil market.

I would like to note here that it was a great honour to receive His Excellency Dmitry Kozak, Deputy Prime Minister of the Russian Federation, at the OPEC Secretariat on November 8^th. In addition to discussing the latest developments in the oil market, we had a chance to sit down together and discuss the ongoing success of the Declaration and Charter of Cooperation and the importance of international energy cooperation as the most effective way to forge a lasting stability to the industry and maintain adequate long-term investment.

Another lynchpin of this process has, of course, been the Russian Minster of Energy, His Excellency Alexander Novak. His skilled diplomacy and deep industry experience have contributed greatly to our success.

Russia’s leadership not only supported the Declaration of Cooperation from the outset, but they saw the need, as did OPEC, for the creation of a permanent, long-term framework for cooperation that would extend beyond the limits and scope of the Declaration. This led to the signing of the Charter of Cooperationat the 6^th OPEC and non-OPEC Ministerial Meeting on the 2^nd of July 2019. The Charter is a permanent, open and transparent platform for dialogue among participating countries with the goal of promoting oil market stability and cooperation on energy technology and other areas. The Charter will also provide a valuable mechanism for confronting the challenges that lay ahead, many of which are out of our control. Today, for example, the oil market is being challenged by a range of non-fundamental factors, such as geopolitics, natural disasters, trade disputes and evolving monetary policies, just to name a few. 

This innovative and inclusive framework will also enable the long-term use of oil as a key element in the ever-shifting global energy mix while also boosting energy efficiency across the value chain and helping improve the environmental credentials of oil. 

The Charter is a voluntary commitment and open to all producing countries. On my travels around the world, I constantly extend an open invitation to all oil producing nations to join this international campaign to promote stability and prosperity around the world.

Thus, in the years ahead, we clearly see robust and expanded cooperation as the most effective way forward to counter volatility and achieve our common goals, for the benefit of producers, consumers and global economy. 

Ladies and gentlemen,

Another important framework of cooperation I would like to highlight this evening is the annual OPEC-Russia High-level Energy Dialogue, which will hold its seventh meeting in the first half of 2020. 

The origins of this initiative date back to December 26^th 2005, when a meeting in Moscow took place between delegations headed by HE Viktor Khristenko, then Minister of Industry and Energy of the Russian Federation and Sheikh Ahmad Fahad Al-Ahmad Al-Sabah, former OPEC Conference President and Secretary General, who was also Minister of Oil of Kuwait.

The two leaders agreed on the framework for the Russia-OPEC Energy Dialogue that would determine its scope, objectives, modalities, frequency and overall structure. Both men stressed the importance of a pragmatic and sustained process of dialogue between the two parties. It was thus decided that annual meetings would take place at the ministerial level, which would be complemented by technical exchanges and collaboration on joint studies and research. These platforms would enable an ongoing forum of exchange on oil market developments and other areas of mutual interest, including energy policies, upstream and downstream investment, data flows and multilateral issues. This then led to the inaugural edition of the current series of High-level Energy Dialogues, which was held in September of 2012 at the OPEC Secretariat in Vienna. The Meeting was chaired by the Russian Minister of Energy, HE Alexander Novak and my predecessor, OPEC Secretary General, Abdalla Salem El-Badri. At the conclusion of the event, the Secretary General stressed the value of open communication with like-minded stakeholders. He said: “We are continually looking to explore and evolve our dialogue and cooperation with other parties. We recognize the value of strong and mutually-beneficial relationships. And I hope that today’s meeting can reinforce the bond of cooperation between the Russian Federation and OPEC.”

Since then, this annual event has risen in stature to become an important and valuable forum for the exchange of oil and energy outlooks and forecasting, as well as joint studies and research. I must note here that His Excellency Alexander Novak has been intimately involved in this initiative from day one and has attended every edition. His keen understanding of the power of dialogue and his visionary leadership have elevated this dialogue platform to new heights.

OPEC holds similar bilateral and international energy dialogue initiatives, which include the European Union, China, India, the United States, the International Energy Forum, the International Energy Agency, the International Monetary Fund, the World Bank and the G20, as well as with private sector technology and energy-related companies. 

Ladies and gentlemen,

The last five years have been marked by extremes: by turbulence and recovery, by crisis and calm, by uncertainty and confidence.

Through it all though, one thing has made all the difference, and that can be summed up in one word: COOPERATION! 

OPEC and its non-OPEC partners have turned the tides and ushered in a new and better way of doing business. A strategy that involves respect, collaboration and transparency. A strategy that is defined by what we have in common, rather then what makes us different. An approach that embraces tolerance and openness to the views of others. A modus operandi that brings out the best in all of us.

This is the new era in international energy cooperation, and I am confident there is much more to be achieved if we work together! 

The legendary Russian pianist and composer, Pyotr Ilyich Tchaikovsky, when speaking about his famous Symphony Number 6, or “Passionate Symphony” captured perfectly the deep satisfaction that comes from giving a project your all, and then being inspired to continually accomplish greater and greater things. He said, and I quote: 

“I have put my whole soul into this work [The Passionate Symphony] . . . You cannot imagine what joy I feel at the thought that my days are not yet over and that I may still accomplish much.”

Ladies and gentlemen,

On behalf of OPEC, I would like to thank both the Republic of Austria, our Host Country, and the Russian Federation, our loyal partner on the international stage, for their strong support of and key contributions to OPEC’s mission of providing lasting stability in the global oil market and prosperity for future generations.

Thank you.