Building on 62 years of success

OPEC Bulletin Commentary – August 2022

This edition of the OPEC Bulletin sees the handover of the OPEC Secretariat to new Secretary General, Haitham Al Ghais. Al Ghais has been a devoted veteran of OPEC for many years, with a distinguished record serving as Kuwait’s representative on the OPEC Board of Governors from 2017 to 2021. He was also the first Chairman of the Joint Technical Committee (JTC) under the ‘Declaration of Cooperation’ (DoC) during its inaugural year in 2017. He remained on the JTC as a Member until June of last year.

While still recovering from the immutable blow of losing the dearly departed Mohammad Sanusi Barkindo, who passed away on July 5 of this year, shortly before completing his second term as OPEC Secretary General, the Secretariat moves steadily forward. Barkindo’s boundless and indelible legacy and impact on OPEC and the oil and energy industry as a whole will certainly be carried on. His torch will continue to burn bright in the DoC and ‘Charter of Cooperation’ (CoC), which he was instrumental in creating.

Barkindo warmly congratulated Al Ghais on receiving the appointment as Secretary General, which began on August 1. Overall support for Al Ghais has been clear and unanimous, as he was appointed by acclamation by Heads of Delegation at a special meeting of the OPEC Conference held via videoconference on January 3, 2022.

Al Ghais brings his own type of diplomacy and style to the new position, backed by his long career as an oil industry technocrat. He joined Kuwait Petroleum Corporation (KPC) in 1993, holding key positions worldwide and has advised six Kuwaiti oil ministers on the global oil market and its developments. Prior to taking the position as OPEC Secretary General, he was Deputy Managing Director for International Marketing at KPC. He is also being celebrated as the first member of the Gulf Cooperation Council (GCC) to hold the post since 2005.

Kuwait has played a very important role in the founding and development of OPEC and Al Ghais is not the first Kuwaiti to hold the Secretary General position.

The third Secretary General of OPEC — Ashraf T Lutfi — was from Kuwait and held the office from May 1, 1965, until December 31, 1966. The next Secretary General from Kuwait was Sheikh Ahmad Fahad Al-Ahmad Al-Sabah, who held office from January 1, 2005, until December 31, 2005. Dr Adnan Shihab-Eldin was Acting Secretary General on his behalf and also served as Director, Research Division. Shihab-Eldin received the second Abdullah Bin-Hamad Al-Attiyah International Energy Award — Lifetime Achievement for the Advancement of the Organization of the Petroleum Exporting Countries in 2014 in recognition of his work at OPEC.

Kuwait’s roots go even further back — to the beginning. It was one of the five Founder Members of OPEC 62 years ago, the others being IR Iran, Iraq, Saudi Arabia and Venezuela.

OPEC was formed against a background of general discontent that was fomenting among oil-producing countries at their ill treatment by international oil majors. Moves by the majors to unilaterally reduce the price of oil per barrel triggered an outrage that eventually led to OPEC in 1960.

The seed for OPEC was first planted at the Maadi Yacht Club, where a secret meeting was held on the sidelines of the First Arab Petroleum Congress in April 1959. Among those present was Ahmed Sayed Omar of Kuwait. In the end an agreement called the ‘Maadi Pact’ was signed, an extraordinary move at the time, as it proposed a Petroleum Consultation Commission made up of the countries present.

On September 14, 1960, in Baghdad, Iraq, the five nations met at Al-Shaab Hall to birth OPEC in an attempt to defend their legitimate interests in the world oil industry.

Fast forward nearly 60 years to a sharp global inventory build between 2014–16, which led to a severe market crash, with its massive itinerant effect on the world economy. With the OPEC Reference Basket price plunging an extraordinary 80 per cent in this time, investments dropped by a massive 27 per cent in both 2015 and 2016. Oil and gas companies laid off almost half a million people and many bankruptcies were filed, around 200 in the US alone.

This led to the adoption of the DoC on December 10, 2016, after a long and challenging consultation process, and later — in 2019 — the CoC. The DoC (with at that time 14 OPEC Members and 10 non-OPEC participating countries) decided upon historic production adjustments to support the rebalancing of the market.

Two non-OPEC countries, the Russian Federation and the Sultanate of Oman, along with three OPEC Member Countries, Algeria, Kuwait and Venezuela, were chosen to monitor the voluntary commitments under a new body called the Joint Ministerial Monitoring Committee (JMMC). Kuwait was chosen to chair the body (under Kuwait’s Minister of Oil, Issam A Almarzooq), along with an alternate chair from the Russian Federation.

The then OPEC Secretary General said that choosing Kuwait as the Chair of the JMMC reflected on both the country’s respected position and status as a leading player in helping bring about the market stability both producers and consumers desire.

When Barkindo met in 2017 with Anas Khaled Al-Saleh, Kuwait’s Deputy Prime Minister and Minister of Finance, who was Kuwait’s Acting Minister of Oil at the time, he thanked him for his country’s efforts to build consensus, his commitment to overcome the situation of excess oil supply and his unwavering dedication to the goals of the Organization.

When the JTC was formed to support the JMMC, with the assistance of the Secretariat, Al Ghais was its first head. The DoC went on to prove itself through a massive downturn that started in 2020 with the COVID-19 pandemic.

Al Ghais has accompanied the DoC process the whole way. We can rest assured that OPEC is in safe and knowledgeable hands.

OPEC Bulletin August 2022

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