Opening Remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the Technical Workshop with Agencies Forecasting World Oil Demand and non-OPEC Supply, 1-2 October 2020, via videoconference.

Distinguished delegates, invited experts, colleagues, ladies and gentlemen,

We are very honoured to welcome you to this technical workshop with widely acclaimed agencies and institutions such as yours on forecasting world oil demand and non-OPEC supply. The timing of this workshop could not be better, as we all constantly try to improve our short-term understanding of market perspectives and to better navigate choppy waters— particularly in light of today’s prevailing compound uncertainties.

It is indeed part of an ongoing effort for transparency and to further strengthen the Secretariat’s comprehensive analysis and analytical depth in research. An earlier initiative with secondary sources was a part of that drive, with an inaugural meeting held on July 9, from which at least 13 bilateral meetings with DoC participating countries emerged. Today’s focus will be on short-term oil demand and non-OPEC supply forecasting.

At that first meeting in July, we invited secondary sources together in order to enrich mutual understanding and allow us to learn from one another. Improving industry standards was a core element of this, and our discussions centred on surveys of production, methodology and sources.

This meeting continues the series as an extension of this topic, with a focus on how forecasting agencies address uncertainties and factor in the changing dynamics of the time as the world continues to grapple with an invisible opponent, COVID-19, and its knock-on effects. We will especially emphasize market developments and prospects.

I appreciate very much the attendance of the esteemed experts joining us over these two days: Amrita Sen from Energy Aspects; Paola Rodriguez-Masiu from Rystad Energy; John van Schaik from Energy Intelligence; Anne-Louise Hittle from Wood Mackenzie and tomorrow Neil Atkinson from the IEA; Francis Osborne from Argus; Jim Burkhard from IHS Markit; Chris Midgley from Platts and Linda Giesecke from ESAI. They all embody the team spirit we are encouraging as we roll up our sleeves and continue to face these challenges together. Each of these well-established institutions is a trusted partner in closely cooperating with OPEC, and they are highly respected references for the global energy community. We encourage all the delegates to take advantage of their deep knowledge and experience and initiate debate on points that may require clarification and deeper understanding. In the end, the mutual goal of all those present is to improve transparency and predictability in an effort to enhance market stability.

Dear colleagues,

While cooperation has always been our middle name, its necessity has been brought home even more emphatically in recent months. The actions of our DoC partners in tackling the unprecedented issues stemming from COVID-19 lockdowns, which destroyed 30% of demand in one blow, have driven the reputation of our Organization to new heights.

The market, and indeed the world, has once again recognized us as a stable, reliable and dependable partner not only in the current crisis, but also within the broader energy dialogue.

These multilateral efforts of the DoC have been lauded widely by leaders across the world, including at the recent G20 Energy Ministerial Meeting on 27 and 28 September, which made reference to the great importance of energy security and market stability. Ministers attending the meeting recognized the spirit of solidarity that has been so effectively demonstrated throughout this year in the face of great uncertainty. The meeting, under the Chairmanship of the Kingdom of Saudi Arabia, also established the Energy Focus Group, which is tasked with monitoring response measures in coordination with international organizations, including OPEC, and reporting back to the Energy Ministers.

This support at the highest levels of government continues to help advance the efforts of OPEC and our non-OPEC partners of the DoC to restore stability in the global oil market. However, we are not yet out of the grip of COVID-19. As we hold this meeting, a ‘second wave’ is washing over many countries in Europe and other areas, with numbers rising even above those in the spring. Some major economies have never gotten out of the ‘first wave’, such as India and the US. It is a trial that continues to face the world community as a whole, challenging all institutions in every country. The rising infection figures continue to create a drag on oil demand and undermine the global economic recovery.

In addition, the adverse longer-term effects with unfolding structural changes are becoming more visible — translating into devastation for many oil producers. Bankruptcies among US oil and gas firms have strongly risen since the oil industry crashed in March and April this year. The situation is most certainly similar for oil producers around the world. Haynes and Boone, an oil patch bankruptcy monitor, reported that nearly 50 oil and gas companies in North America declared bankruptcy in 1H20.

Distinguished colleagues,

I want to heartily congratulate you, our DoC partners, for your incredible successes to date. In the face of an unknown adversary of monstrous proportions, you have stayed composed, working continuously and rigorously to help navigate our industry through the toughest times in history. We have proven our dedication through strict scrutiny and high conformity above 100%. This is even more impressive given the unparalleled size of the adjustments made by this group.

We remain cautiously optimistic about the oil market’s recovery, even as the world continues to battle COVID-19 resurgences and clusters. News reports state that the world is getting closer to finding a vaccine; when this day comes, the demand/supply scenario will significantly brighten. However, until that time, large uncertainties and risks will continue to destabilize the oil market and affect the pace of economic recovery.

Dear colleagues,

Throughout this critical time, the Secretariat has been continuing to provide technical support, especially through quality data, in-depth analysis and comprehensive reports, as well as through ongoing meetings and dialogues. Our recent engagement on issues of crude oil production, including this meeting on market analysis and forecasting, will continue, and the networks we are building now will serve us well going forward.

The sessions held today and tomorrow are meant to help us get a clear picture of the methodologies used by individual agencies in tackling the subjects of global oil supply and demand trends and forecasts, including differentiating between apparent and end-user demand. They will describe their models, the weight of their qualitative expert judgments, and share evidence of their forecast accuracy as well as inherent challenges.

I want thank our participants for taking the time to attend today and tomorrow’s sessions and look forward to active engagement and discussions. I am sure insight will be gained as to how each participant might improve transparency and integrity. Narrowing our differences will constitute a win-win for each of us, for OPEC and for the oil industry as a whole.

OPEC is celebrating its 60th anniversary this year, and throughout this span of six decades, relationships with various institutions have deepened, providing ongoing support and expertise over the decades.

One thing is certain, in the highly complex and challenging world of today, we must continue to strengthen our networks and seek to continuously build bridges to attain the success we all aspire to.
Working in silos will simply no longer get the job done.

Thus, as we undertake this meeting today, I am encouraged to see another step forward in this direction as we bring these parties together for the benefit of all stakeholders.

Distinguished colleagues,

We all acknowledge that forecasts are forecasts and can only go so far in completely and accurately assessing the future, but famous French mathematician and theoretical physicist Henri Poincaré once wrote, and I quote:

"It is far better to foresee even without certainty than not to foresee at all."

So, let us proceed with today’s agenda knowing that our common efforts here today and tomorrow will be both worthwhile and productive.

I wish us all a highly informative and interactive meeting.

Thank you.

 

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General