Opening Remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 156th Meeting of the OPEC Board of Governors, 28 May 2020, via videoconference.

Thank you, Mr Chairman, for your extremely thoughtful and inspiring comments.

For the benefit of our colleagues who have not had the opportunity to meet you in person, I will provide a brief introduction on the extensive experience that you bring to this Board.

The Chairman Magloire Menie Akoue has more than 20 years of public service in the Gabon Ministry of Oil, Gas, Hydrocarbons and Mines.  During this time, he has focused on technical control of E&P activities and cost controls, and currently serves as technical advisor in the Ministry.  Engineer Menie Akoue holds an Advanced Master's Degree in Petroleum Geology and has an outstanding international record, with stints of service in different global oil companies and other entities in France, Canada and the US.

A warm welcome, Mr Chairman, to the OPEC family.  We all look forward to your leadership of this Board at such a decisive moment in our history.

I also wish to thank your predecessor as Chairman, Mr Agustín Mba Okomo, the Governor for Equatorial Guinea, for his exemplary leadership in 2019.

Mr Chairman, I am moved by your graceful remarks about our dear brother and colleague, Hossein Kazempour Ardebili.  This is indeed a time of grief for all of us at the Organization. OPEC’s greatness is owed in part to Hossein’s enduring contributions, leadership and long service to this esteemed Board.

We will always remember Hossein as a global citizen, accomplished scholar and astute diplomat of international stature. He was a gallant representative of his home country, the Islamic Republic of Iran, the doyen of the Board, and a longstanding pillar of OPEC.

Hossein was a beloved friend of mine – a friendship of 34 years made and strengthened by our lifelong involvement in OPEC.  I will find everlasting inspiration in his wisdom, thoughtful guidance and tireless commitment to our collective success.

In our late colleague’s honour, the Secretariat has produced a brief memorial video which I would like to share with you.  It was first aired during the signing of a book of condolences at the Secretariat in the presence of the Ambassador of the Islamic Republic of Iran, HE Kazem Gharib Abadi.  We will share this book with Hossein’s loved ones as a token of our lasting respect.

[SHARE VIDEO ON SCREEN]

May Almighty Allah accept our colleague and great friend in Jannat Alferdous

Esteemed Members of the Board,

I would like to echo the Chairman in welcoming the Ad Hoc Governor of the Islamic Republic of Iran, Dr Amir Hossein Zamaninia, to today’s meeting.

Allow me to also take a few minutes to recognize the Staff of the OPEC Secretariat for their dedication and forbearance in these exacting times.

Their conduct is a reflection of the strength and resilience of this great Organization.  Not a day has gone by that our Staff have not carried out their duties, often from home while helping to care for their own families, and in compliance with the Austrian government’s instructions that OPEC has endorsed.

In a matter of weeks, with the tireless support of our Staff and Member Countries, we have held three Extraordinary Meetings (9-10 and 12 April), and participation in the G20 Energy Ministers (10 April) webinar.

Together with the non-OPEC participating countries in the ‘Declaration of Cooperation’, we have ushered in the largest stabilization effort in oil market history.  There is no precedent in terms of the size and duration of the production adjustments that all the OPEC and non-OPEC countries participating in the Declaration of Cooperation (DoC) have committed to undertake.

At the same time, preparations continue for the upcoming Economic Commission Board, the JTC, JMMC, OPEC Conference and OPEC and non-OPEC Ministerial Meeting.

The regular work of this Organization never missed a beat.  Two weeks ago, we released the Monthly Oil Market Report.  In these extraordinary times, the MOMR is recognized more than ever as a go-to reference for the industry, journalists, analysts and many others.

Our Staff are also preparing for the release of the Annual Statistical Bulletin in June.  In conjunction with our good friends in Baghdad, the planning continues for our 60th Anniversary celebrations in September.  We are also preparing for the November release of the World Oil Outlook.  I am certain that the 14th edition will be one of the most sought-after WOOs since it was first published in 2007.

During the past month, we have organized and hosted a series of virtual round-table briefings with select energy policymakers and experts from international institutions, consulting firms, the oil industry, the financial community and think tanks around the world. These roundtables also featured the European Commission; and oil consuming countries, such as China and India.

The discussions provided a productive and timely platform to exchange views on the historic outcomes of the Ministerial Meetings, the unparalleled economic and oil market conditions resulting from COVID-19, and the public health measures taken to control the pandemic.  

Holding these energy roundtables has proven to be of enormous strategic importance by drawing on the expertise of leading analysts, scholars and economists.  They have provided a deeper understanding of the market and conditions affecting it.  As no individual stakeholder can have all the answers, it is only by reaching out and deepening dialogue between reputable institutions that can provide a better and broader sense of the rapidly evolving energy landscape.

These events, all held virtually from our Headquarters, have accomplished several pivotal objectives.  These objectives include strengthening our messages of commitment to market stability beyond the short-term; enhancing understanding with major stakeholders; and enriching our knowledge of the interwoven complexities in such unprecedented times in an efficient and effective manner through outreach channels and a transparent communications strategy.

Let me also convey my gratitude to all the OPEC Member Countries for their support, and their solidarity, throughout this unparalleled international emergency. 

It is also important to note that we have had exceptional cooperation from the Government of Austria throughout this crisis.  We have an open and direct line of communication with the Austrian Government, including HE Alexander Schallenberg, the Foreign Minister.  This has helped us to implement the local guidelines and ensure the safety of Staff and their families while maintaining uninterrupted services to our Member Countries.

The world has changed in many ways that we could not have imagined when this Board met at the end of October 2019.  Let me briefly recap a few highlights since we last convened:

In December, our Member Countries – together with the other DoC participants – proactively adjusted production by 500,000 b/d to a then-record 1.7 mb/d.  This decision demonstrated the resolve of all participating countries to ensure market stability and predictability going into a new year – and indeed a new decade.

But no one could have predicted the fast-moving situation that would transpire with COVID-19.  In a very short time, a wave of shock and mounting uncertainty swept aside the hopeful start to the year.

At the 178th Extraordinary Meeting of the OPEC Conference on March 5th and 6th, the full market impact of COVID-19 was unclear.  In fact, the World Health Organization (WHO) did not declare a public health pandemic until March 11th.  Our meetings here in Vienna were held under difficult circumstances, with special precautions taken to protect the health of all delegates and OPEC Staff.  All this was done in close consultation with the Austrian authorities.

Little did we know at the time that the epicentre of COVID-19 would make a dramatic shift from one continent to another, extending the economic destruction and oil market meltdown.

The human impact is truly staggering.  The latest WHO data shows around 5.5 million confirmed cases worldwide and 350,000 lives lost.  The epicentre of this terrible human tragedy is now shifting to Latin America, with North and South America combined accounting for 45% of cases and 42% of fatalities worldwide.  The US and Brazil lead in the number of confirmed cases at the moment.  Although declining infection rates have allowed the slow opening of economies in some regions, such as here in Europe, COVID-19 remains an ever-present danger to our human and economic well-being.  All our Member Countries continue to battle this pandemic.

The global economic recession and oil market collapse we have witnessed in such a short time are unlike anything I have seen in my career.

Our latest MOMR projects that the world economy will shrink by 3.4% in 2020, following global economic growth of 2.9% in the previous year.  This projection is in line with other leading international institutions.

We expect world oil demand growth to drop by a staggering 9.07 mb/d this year, with the worst impact in the second quarter.  Demand for the year is likely to be around 90.59 mb/d – taking us back to levels we saw before the 2014-2016 market downturn.

We are also deeply concerned about what the current crisis means for investment in our industry and our countries.  The market collapse has already pushed petroleum companies over the edge and poses an existential threat to others in the oil industry.

We now expect CAPEX in non-OPEC countries to plummet by 23% y-o-y in 2020, to about half the $741 billion record set in 2014.  This puts highly skilled jobs, innovation and advances in efficiency at risk at a time when the industry – and the global economy – need them the most.

For our Member Countries, the current circumstances and financial setback will sharply curtail efforts to diversify, finance technological innovation, and invest in the energy transition.

As market conditions continued to deteriorate at the end of 1Q20 and the start of the second quarter, it became clear that urgent action was needed.  Key stakeholders from around the world were lining up behind the DoC countries to support proactive, pre-emptive and decisive action to prevent a total market meltdown.

Action was needed, and act we did.  The agreed production adjustments, totalling 9.7 mb/d for two months, followed by phased reductions in the adjustment levels over a further 22 months, were unparalleled in scope and duration. The two-year period for production adjustments demonstrated the full commitment of all stakeholders to achieve common goals.

Some OPEC Member Countries – led by Saudi Arabia, the United Arab Emirates, Kuwait – along with Oman have gone further with additional voluntary adjustments, totalling around 1.2 mb/d.  These contributions reduce the risk of tank tops and offer fresh reassurance and confidence to the market.

This historic OPEC-led response is already helping to reduce volatility, stabilize the oil market, and to provide a platform for recovery and growth in the coming years.  ‘Black Monday’, when West Texas Intermediate took a nosedive into negative territory for the first time ever on April 20th, now appears to be an anomaly.

Another pivotal outcome of the April meetings was the encouragement and outpouring of support the DoC participants received. In addition, we have seen commitments from independent producers, and engagement from the G20 and other international bodies, on the need for proactive and coordinated action to stabilize the world’s most important energy source.  There are stakeholders in Canada, Norway, Colombia, Brazil and many other producing nations who have added their support to broader collaboration to stave off a further erosion of the market.

We continue to work closely with the International Energy Agency – including regular consultations – and International Energy Forum to ensure open lines of communication between producers and consumers.  Together, we collaborate to ensure access to accurate, timely and transparent data about the markets.

The discussions held over the past few weeks have helped us gain a better understanding of the impact of this crisis on other actors.  They have reinforced OPEC’s image as a leading force in achieving a stable and secure energy supply for the world.  They have demonstrated again our desire to maintain the momentum in achieving broad and inclusive dialogue and cooperation.

Esteemed Members of the Board,

The challenges created by the COVID-19 tragedy will require special attention.  I would like to point out that the exceptional circumstances we are encountering today reinforce the importance of the Organization to its Member Countries, and to the world at large.

Unfortunately, we have no crystal ball at our disposal to predict the future or alert us to unforeseen events like COVID-19.  We are facing a new, more uncertain world – a new normal.  In response, we need to position the Secretariat so it can maintain its leadership in providing fact-based assessments, timely data and strategic guidance going forward.  We can and should seize the momentum recognizing the role and success of OPEC+ in the global oil market, and elevate it further to a platform of broader collaboration with longer-term perspectives.

As part of our 60th Anniversary celebration, the Secretariat will publish a book on the history of this esteemed Organization to date.  It will chronicle the many great moments over the years – the challenges we have overcome through cooperation, and the opportunities we have embarked on through shared purpose and vision.  It will be a timely reflection of six decades of OPEC history in the year of COVID-19.

I am confident that we will emerge from the current crisis more united, stronger and more forward-looking.  Much of the credit goes to this Board and your efforts to create a more agile Organization – one that is in a strong position to respond to unforeseen challenges and market volatility.

I conclude by recalling the reassuring words of Dr Tedros Adhanom Ghebreyesus, the WHO Director-General who has ably led the global response to the COVID-19 pandemic:

“With solidarity, humility and assuming the best of each other, we can – and will – overcome this together.”

Thank you.  I now turn the floor back to the Chairman.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General

The meeting was held via videoconference

The meeting was held via videoconference