Brief high-level remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 20th Meeting of the Joint Ministerial Monitoring Committee (JMMC), 15 July 2020, via videoconference.

Excellencies, ladies and gentlemen,

The month since the last Joint Ministerial Monitoring Committee (JMMC) that took place on 18 June has been relatively sedate, particularly when placed alongside the preceding months of April and May!

This should be viewed as a positive development.  It is clear that our actions taken on 12 April at the 10th (Extraordinary) OPEC and non-OPEC Ministerial Meeting, and then supplemented at the 179th OPEC Ministerial Conference and the 11th OPEC and non-OPEC Ministerial Meeting on 6 June, have helped reintroduce a semblance of stability to the market.

Our decisions were well-informed and well-communicated, and they provided reassurance to the market that the OPEC+ group is proactive and fully observant of the ever-evolving oil market fundamentals.

Further evidence of the attentiveness of the OPEC+ group was seen after the last JMMC, with Participating Countries that had been unable to reach the full 100% conformity in May and June submitting plans to the OPEC Secretariat to accommodate this in July, August and September, in addition to their already agreed production adjustment for those months.

This ensures that the DoC remains fair, timely and equitable, and again gives comfort to the market that we are fully focused on our objectives of expediting the rebalancing process.

It was also positive to see last week’s technical workshop with secondary sources.  It provided a facilitating platform for the secondary sources to outline how they collect and process their production data, and for countries to engage with them about questions they may have and any discrepancies between directly communicated and secondary source numbers.

It is significant that all 23 participating countries in the DoC were participants in the workshop and were fully engaged in the virtual meeting on July 9.  Furthermore, they commended the workshop and urged additional bilateral talks.  The Secretariat is already facilitating three such bilaterals and is also including the workshop in its Work Programme so this highly successful technical meeting becomes a regular feature of our calendar.

This is also beneficial in ensuring that the DoC is open and transparent.

It has been positive to see all participants vocalize their support for 100% monthly conformity.  Looking ahead, each of us now needs to double down on the unanimous decisions we have made, fully execute the plans in place for the coming months, and reinforce the commitment of OPEC+ to a balanced and stable market.

We need to remember that strength, collaboration and positive outcomes come only through continuous effort and struggle from each and every participant in the DoC.  We need to show resourcefulness and resolve.  It was the great Mahatma Gandhi who once said:

“Strength does not come from physical capacity. It comes from an indomitable will.”

The importance of this is clear in the numbers that we will look at and digest today.

Oil demand has bounced back from the lows that saw daily drops of more than  20 mb/d in April, but it is still expected to witness an annual drop of 8.9 mb/d for the whole of 2020.  Given considerable uncertainties, the expected rebound in 2021 will be short of covering the lost demand this year and will not reach pre-crisis levels of 100 mb/d soon.

From the perspective of the vital indicator of stocks, in May, OECD commercial oil stocks surged further by 29 mb.  For March, April and May combined, the overall build was around 270 mb!

While this could have been significantly higher if there had been no DoC production adjustments – possibly over 1 billion barrels –, we need to be fully focused on bringing down the inventory builds we have seen.  This is vital to the rebalancing process, and vital to helping return sustainable stability to the market.  We have a solid framework for action to follow and are implementing it step-by-step.  Yet we must remain vigilant as we face considerable market uncertainties in the coming months.

We have just heard the summary report of the JTC Chair, who took note of the important improvement in the conformity level in June.  This improvement is a sign that every participating country recognizes that the attainment of full conformity is not only fair and equitable, but vital for the ongoing rebalancing efforts. Furthermore, the significant performance in the overall conformity level in May and June has gained wide recognition within the energy community and the oil market in particular. Yet there is still room to improve and to ensure full conformity by each and every participating country.

Here, I should also like to add that the Secretariat continues its outreach to other major oil producers beyond the DoC, as well as to consumers.  We fully appreciate the importance of open channels for communication.

In this regard, since the last JMMC in June, we have held bilateral meetings with Brazil’s and Argentina’s energy ministers; taken part in an African Ministerial Roundtable to discuss the impacts of the COVID-19 pandemic on Africa’s energy sector, co-hosted by Senegal’s Ministry of Petroleum and the IEA; participated in a session hosted by the Canada-UAE Business Council to discuss ‘Energy issues in the post-COVID-19 world’, with HE Suhail Mohamed Al Mazrouei and HE Jason Kenney, Premier of Alberta, Canada; and held the inaugural Technical Meeting of the OPEC-GECF Energy Dialogue.

It was also a great pleasure to recently brief HE Abdelmadjid Attar, Algeria’s newly appointed Minister of Energy and President of the OPEC Conference, on global oil market developments and the progress made in implementing the recent decisions of the OPEC Conference and the OPEC and non-OPEC Ministerial Meetings.  We look forward to working with you through this JMMC, and in forthcoming Ministerial Meetings.

I would also like to take this opportunity to thank your predecessor, HE Mohamed Arkab, for his hard work and diligence as OPEC Conference President in the first half of 2020.  It has been a period like no other in the history of OPEC: he helped guide us through some extremely stormy waters.

Excellencies, ladies and gentlemen,

I have been known to talk about the DoC as a Catholic marriage, and the importance of us all staying the course.  In regards to this, I would like to recall a line from the legendary Russian writer, Leo Tolstoy:

“What counts in making a happy marriage is not so much how compatible you are but how you deal with incompatibility.”

It helps underline the fact all our countries are different, with at times varying objectives.  But at the heart of the DoC is the fact that all peoples of this planet we call home benefit from a balanced market, and a sustainable stability, which is why we all continue to work through the challenges we face.

Thank you.

 

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