Remarks by OPEC Secretary General

Delivered by HE Mohammad Sanusi Barkindo, OPEC Secretary General, at the 31st Meeting of the Energy Charter Conference, 17 December 2020, via videoconference.

Excellencies, Mr. Secretary-General, ladies and gentlemen,

It is a real pleasure to speak at the 31st Meeting of the Energy Charter Conference.

Allow me to begin by paying tribute to the indefatigable President Ilham Aliyev, the Government and people of Azerbaijan for their recent efforts that will contribute to pave the way for stability and prosperity in the whole region. These decisive efforts will hopefully lead towards finding a lasting solution that has been long awaited.

I would also like to congratulate my dear friend, HE Parviz Shahbazov, Minister of Energy of the Republic of Azerbaijan, Chair of the Energy Charter Conference, for doing such an outstanding job in chairing this conference at such a historic moment.

Azerbaijan’s Chairmanship is a fitting demonstration of the country’s commitment to the promotion of dialogue between cultures. Throughout the world, Azerbaijan is recognised as a centre of multiculturalism. This is clear through the ‘Baku Process’ launched in 2008 to strengthen inter-cultural dialogue and the World Forum on Intercultural Dialogue held every two years in Azerbaijan.

Furthermore, Azerbaijan is the cradle of the oil industry.

Azerbaijan was the location of many “firsts” in the historic development of our industry. In 1846, more than a decade before ‘Colonel’ Edwin L. Drake struck oil on American soil for the first time, a 21 meter well was drilled in Bibi-Heybat for oil exploration--the first successfully drilled oil well in human history. Within three decades of the first oil well being drilled in 1846, the world witnessed the building of the first wooden oil derrick in 1871, the first distillery in 1876 and the first oil tanker ship in 1877- all in Azerbaijan- truly the cradle of the oil industry.

At OPEC, we know first-hand about Azerbaijani statesmanship. Azerbaijan has been a pivotal member of the ‘Declaration of Cooperation’ since its inception in 2016. President Aliyev was the first world leader to publically call upon OPEC and non-OPEC countries to close ranks and collaborate in order to rescue the oil industry. His visionary leadership honours his country’s incredible history.

Minister Parviz Shahbazov has continuously been a forger of consensus, widely admired by the entire DoC family for his wise interventions, diplomatic skill and depth of knowledge of the energy industry. At OPEC, we feel very fortunate to have such a friend and partner.

OPEC’s relationship with the Energy Charter Secretariat goes from strength to strength. Earlier this year, we convened the First OPEC-Energy Charter Secretariat-OPEC Fund Annual Legal Workshop. We were honoured to learn from the wise words of my colleague and friend HE Dr. Urban Rusnák, Secretary General of the Energy Charter Secretariat.   

This is just one way in which we hope our cooperation can continue to expand in the future.

We commend the chair for the judicious selection of the topic of this conference, ‘Energy Efficiency for all: Innovations and Investments.’ Azerbaijan and the Energy Charter Secretariat have worked well together on this critical issue, including through the Energy Charter Secretariat’s ‘In-Depth Review of the Energy Efficiency Policy of the Republic of Azerbaijan,’ prepared in 2019. This helped the development of an energy strategy and the preparation of Azerbaijan’s first national Energy Efficiency Action Plan.

At OPEC, we recognise the importance of energy efficiency as a means of reducing greenhouse gas emissions, while allowing for sustainable development.

Dan Yergin, the great historian of our industry described energy efficiency as the “energy resource that has the potential to have the biggest impact of all.” If we look at OPEC’s recently published World Oil Outlook 2020, oil demand in the transportation is an illustrative example. Between 2019 and 2045, improved fuel efficiency is expected to be responsible for a decline in demand of 8.6 mb/d. In the OECD, this will be 4.4. mb/d. In both cases, this amounts to more demand reduction than that achieved by penetration by alternative fuel vehicles.

It is worth recalling that energy efficiency requires efficiency improvements in both demand and supply. It is often said that digitalization is one of the most effective means of unlocking energy efficiency improvements. OPEC is extremely supportive of measures to improve data transparency, particularly through our proactive role in the Joint Organizations Data Initiative. Additionally, we organise a multitude of meetings with our partners on the issue of data transparency, including with the IEA and IEF, as well as secondary source reporting agencies. Our aim is to constantly improve the accuracy and timeliness of data.

We also believe that dialogue between consumers and producers is critical to improving efficiency. For this reason, we have an extensive range of formalised, international dialogues with a broad range of partners. These offer indispensable platforms for exchanging views, providing clarity and finding mutually beneficial solutions.

Ladies and gentlemen,

This conference is being convened in extraordinary circumstances. The COVID-19 pandemic continues to cause serious disruption across the globe. I would like to take this opportunity to pay tribute to Azerbaijan for the vigorous and proactive measures taken in combatting COVID-19. In May of this year, the WHO described as Azerbaijan an ‘exemplary country’ in the fight against the pandemic. Azerbaijan’s voluntary contributions to the WHO are astounding. Azerbaijan has provided humanitarian and financial assistance to over 30 countries, during the COVID-19 pandemic.

The pandemic has underscored how unity and efficiency are required in response to these unprecedented times. The oil demand destruction caused by the COVID-19 pandemic greatly imperilled our industry, which threatened to present even greater challenges to the global economy.

To help counter the situation, OPEC and our DoC partners agreed at two Extraordinary Meetings on April 9 and 12 to new voluntary production adjustments, beginning with 9.7 mb/d, in May and June 2020, which was extended to July. Moreover, the tailored adjustments would also run two years until April 2022. Azerbaijan, ably represented by Minister Shahbazov, played a critical role in ensuring the adoption of these decisions, by ably deploying his immense diplomatic skills and acumen during these contentious moments.

These supply adjustments are the largest and longest in the history of OPEC and the oil industry.

The adjustments were subsequently ‘enhanced’ at the 11th OPEC and non-OPEC Ministerial Meeting on 6 June, indicative of our adaptability. We also agreed to a compensation mechanism for Participating Countries for underperformed volumes.

On, December 3, 2020, at the 12th OPEC and Non-OPEC Ministerial Meeting, participating countries unanimously agreed to a further flexible implementation of the DoC voluntary production adjustments in the first quarter of 2021. In light of the current oil market fundamentals and the outlook for 2021, we agreed to reconfirm the existing commitment under the DoC decision from 12 April 2020, then amended in June and September 2020, to gradually return 2 mb/d, given consideration to market conditions. We decided to voluntary adjust production by 0.5 mb/d from 7.7 mb/d to 7.2 mb/d beginning in January 2021. Furthermore, we agreed to hold monthly OPEC and non-OPEC ministerial meetings starting January 2021 and we extended the compensation mechanism to the end of March 2021.

The objective behind our actions is the pursuit of a sustainable stable market in the interests of producers and consumers. This is essential to attract the levels of investment necessary to meet the oil demand of the future. According to OPEC’s World Oil Outlook 2020, the global oil sector will need cumulative investment of $12.6 trillion in the upstream, midstream and downstream through to 2045. These investments will be vital for improving the efficiency of the industry.

Ladies and gentlemen,

Allow me to conclude by once again reiterating OPEC’s support for the noble goals at the heart of the Energy Charter Conference. We hope cooperation between our two Organizations will continue to grow from strength to strength.

Although we cannot, in the current circumstances, meet in Baku, may the spirit of this great multicultural city; a city of intercultural dialogue and the birthplace of the oil and gas industry; inspire this meeting today and all our discussions going forward.   

Thank you for your kind attention.

HE Mohammad Sanusi Barkindo, OPEC Secretary General

HE Mohammad Sanusi Barkindo, OPEC Secretary General