OPEC, others working to achieve oil market stability – Barkindo

Organisation of Petroleum Exporting Countries, OPEC, has harped on the positive roles of Angola, as the Secretary-General, OPEC, Dr. Mohammad Sanusi Barkindo, visits Luanda, Angola.

In its recent lecture, OPEC and its role in oil market stabilization , Dr. Barkindo stated: “I must confess to having a very personal affinity to this country which extends beyond the bonds of African fraternity. Angola’s membership of OPEC began on 1 January 2007, but of course, the negotiations that led to this milestone event took place throughout 2006, at a time when Nigeria held the Presidency of the OPEC Conference. During that year, I had the tremendous honour of serving as Acting Secretary- General of the organisation.

“Indeed, Angola was formally admitted to the OPEC family in Abuja at the 143rd (Extraordinary) Meeting of the OPEC Conference! Needless to say, Angola becoming a Member Country was a tremendous boon for OPEC. A new source of positive energy and dynamism was injected into the organisation, as we benefited from the experience of an extremely important regional player from central and southern Africa.

“Angola’s accession in 2006 was the first new addition to OPEC since my own country, Nigeria, joined in 1971. This had enormous repercussions, the ramifications of which are still being felt today. Regional neighbours saw Angola make a success of its membership and in due course, Gabon and Equatorial Guinea, would enter the OPEC fold.”

He said: “Furthermore, Angola’s membership after a 36-year hiatus on expanding the organisation, proved that reaching out and embracing new partners yields results. This spirit of collegiality among nations, willingness to try things differently, innovation and honouring one’s commitments has also been at the core of OPEC’s recent cooperation with its non-OPEC partners under the umbrella of the “Declaration of Cooperation.”

“Therefore, history will conclude that Angola joining the OPEC family was a precursor to membership of our organisation increasing, a strengthening of the African voice in our decision-making structures and this new era of cooperation among oil- producing countries through the ‘Declaration of Cooperation.’ So, given this context, you can understand my absolute joy at our being with you today.

“The timing of this Mission is also extremely exciting. At OPEC, we follow with great interest and admiration the very commendable reform agenda of President João Manuel Gonçalves Lourenço, particularly as he seeks to modernise the oil industry, improve transparency and good governance.

“Undoubtedly, President Lourenço has achieved a series of notable successes, which have improved the industry’s efficiency and effectiveness. We commend the President’s decision to create a new Agency and separation of conflicting roles of policy, regulation, and commercial operation, in line with the best international practices. OPEC also welcomes Angola’s efforts to upgrade, and expand its refinery sector and we stand ready to provide whatever technical advice and expertise that we can, in this regard.

“Another area of intense activism on the part of the President which strongly resonates with the ethos and philosophy of OPEC is his commitment to international cooperation and the multilateral process. It gladdened my heart when President Lourenço told the UN General Assembly in September of this year that Angola support.

“All efforts to promote cooperation among the nations of the whole world, consolidate peace and defense for cooperation, trade and investment relations at the bilateral and multilateral levels.”

He also said: “This fits ‘hand-in-glove’ with OPEC’s raison d’être. As an intergovernmental organization, we strongly share the view that cooperation among nations remains the most effective problem-solving mechanism at our disposal.

“When you listen to any OPEC official speak; if you read any of our publications, statements, or press releases; if you examine our statute; you will see our core objective repeated over and over again: oil market stability on a sustainable basis. This goal drives all of our activities, all our actions and almost all our research.

“It is very important that we step back and ask the deceptively simple question: why? Why does oil market stability matter? Why does it motivate OPEC in everything it does? Why does it generate the attention of decision makers and world leaders across the political spectrum?

“Having invested a lot of time reflecting on this, I think the most concise formulation of why oil stability matters hails from the great historian of our industry, Professor Dan Yergin, when he said in his book “The Quest”:

“The industrial civilization that has evolved over the last two and a half centuries rests on a hydrocarbon foundation. Such is the importance of oil that it plays an indispensable role in lubricating economic growth, sustainable development and improving the livelihoods of billions of people around the globe. Oil market stability begets prosperity; it is an essential component in fighting poverty. The multiplier effects of oil market stability are immense for other industries and the global economy.

“For example, consider the hard-earned savings of millions of retirees whose fortunes are tied to pension funds that invest in our industry. Think of the sheer number of families dependent on bread-winners employed in our sector and the job opportunities which result from oil market stability.

“OPEC does not seek stability for stability’s sake: rather we are acutely conscious of the broader social and economic benefits for all which come as a result of sustainable oil market stability. And when we cast our minds back to the depths of the last downturn in 2015-16, one can only shutter at how close the world came to a catastrophe of epoch defining proportions.

“If you don’t take my word for it, I’d like to quote David Kreisman, Senior Vice President at the credit rating agency Moody’s from September 2016: When all the data is in, including 2016 bankruptcies, it may very well turn out that this oil and gas industry crisis has created a segment-wide bust of historic proportions.”

“This situation came about as a result of the fact that from 2014 to 2016, world oil supply growth outpaced that of oil demand, with world oil supply growing by 5.8 mb/d, while world oil demand increased by 4.3 mb/d. By July 2016, OECD commercial stock overhang reached a record high of about 403 mb over the five-year industry average. The OPEC Reference Basket price fell by an extraordinary 80% between June 2014 and January 2016.

“Nearly one trillion dollars in investments were either frozen or discontinued, and a record number of companies in our industry filed for bankruptcy. According to the consulting firm Graves & Co., almost half a million jobs were lost in the global oil and gas industry.”