The Secretary General, Organisation of Petroleum Exporting Countries (OPEC), Dr. Sanusi Barkindo, has said that given the very bad experience of 2020, the worst part of the crisis in the global oil market has been put behind it by the oil and gas industry.
Barkindo spoke while participating via video-conference at the 11th ‘Global UAE Energy Forum, which focused on the 2021 oil and energy outlook, held under the patronage of Suhail Al-Mazro, United Arab Emirates’ Minister of Energy and Industry, and organised by Gulf Intelligence, recently.
The Secretary General who took part in a question and answer session that focused on the current oil market situation and the prospects for the Declaration of Cooperation (DoC) and world oil demand in 2021, recalled how the deal helped to return some level of stability to the market.
He emphasised that the year 2020 offered many lessons and it was vital to take stock for the year ahead, saying that, “the worst is over” and that he was, “hopeful and cautiously optimistic, going forward.”
The Secretary General recalled the outcome of the 13th OPEC and non-OPEC Ministerial Meeting held in early January, emphasising that the decisions taken were balanced and reached through consensus, determination and flexibility in the interests of oil market stability.
“We had two days of intensive discussion on market developments. We came to the consensus that we should not bring back 2 mb/d.”
It underscored, he added, “our step-by-step approach.”
The OPEC boss also highlighted the leadership role being undertaken by Saudi Arabia with its additional 1 mb/d voluntary adjustment for February and March to help the market navigate the traditionally low demand first quarter.
He noted that a number of key inter-related variables that needed to fall in line for the market to return to a sustained balance, including “vaccines, lockdowns, fiscal and monetary stimulus, DOC production adjustments, GDP growth and oil demand rebound.”
He said that all these variables needed to be monitored very closely, and it was vital that OPEC and its non-OPEC partners keep their hand on the steering wheel, to help drive the recovery in 2021.
He added: “Regardless of the heroic efforts we have undertaken, stocks are still high. We look at both the OECD and non-OECD stocks, and both are high. We need to see them further reduced and the DoC was assisting the market in accelerating the stock drawdown.”
On the possible re-emergence of shale oil, the Secretary General said not even producers from the United States were insulated from the current crisis.
“There is no doubt that all producers of hydrocarbons have suffered from the impact of COVID-19. OPEC has established a channel of communication with the US independent producers. US producers are not insulated from this hemorrhage,” he stated.
He also highlighted the importance of investment in the sector, saying that it was critical to the survival of the oil and gas industry.
“Even prior to COVID-19, we were put on the defensive. Oil and gas will continue to be part of the energy basket. Investment is the lifeblood of this industry and is vital to meet future demand,” he stated.
OPEC had directed its members and allies that have not fully complied with the output curbs agreed upon in April when the prices of some grades of oil in the international market became negative, to submit a compensation plan by January 15.
