…Group prepares for rancour-free meeting next month
Hector Igbikiowubo 26 October 2016, Sweetcrude, Lagos – Secretary-General of the Organisation of the Petroleum Exporting Countries, OPEC, Dr. Mohammad Sanusi
Barkindo, says the recent agreement by members of the organisation to reduce output to between 32.5 and 33 million barrels per day, mbd, was driven by supply fundamentals.
He spoke amid preparations by the 14-member body to ensure a rancour-free meeting next month, where the output cut would be implemented with members getting fresh quotas.
Meeting late September in Algiers, the Algerian capital, in an emergency meeting to discuss the global oil market situation, OPEC agreed to limit supply to support prices, its first such decision since 2008.
Dr. Barkindo, who spoke at an oil and money conference in London, maintained that the Algiers agreement was driven by supply fundamentals, specifically the high level of inventories that had built up in recent years on the back of excess supply, often from high-cost regions.
He also said the agreement was helping to restore balance and sustainability to the oil market.
Evaluating the current oil market environment, Dr. Barkindo said it was vital to see a continued drawdown in stocks and to quicken the market rebalancing process.
Barkindo also said it was vital to restore investments in a sustainable manner, adding that OPEC’s latest World Oil Outlook sees oil-related investments requirements of $10 trillion in the period to 2040.
Meanwhile, according to him, the 14-member body was working at ensuring it reaches a deal on the output cut decided in Algiers without rancour when its ministers meet next month in Vienna, Austria.
“OPEC should be able to reach a deal to limit oil production without too much disagreement about individual countries’ output levels”, Barkindo said.
All the building blocks for the implementation of the output cut will be in place in a timely fashion, he further assured.
On reaching the agreement to reduce production to a range of 32.5 million to 33 million barrels per day in Algiers, OPEC ministers left the delicate issue of how much each of the 14 members will produce, handing the matter to what the group termed a ‘high-level committee’ that will meet in Vienna on October 28-29.
But, the deal faces potential setbacks from Iraq’s questioning of secondary sources’ output estimates on which OPEC bases its production decisions, and from countries including Iran, Libya and Nigeria whose output has been hit by sanctions or conflict.
The decision of the ‘high-level committee’ would have to be ratified at the meeting in November.
