…Reports ‘highest ever’ level of compliance with production cuts
OpeOluwani Akintayo 27 September 2017, Sweetcrude, Lagos – The Organisation of the Petroleum Exporting Countries, OPEC, says investments in the oil and gas sector would rise slightly this year and in 2018.
The organisation made the prediction as it reported highest ever level of conformity with the crude oil production cuts embarked on by its members and non-OPEC producers since the beginning of the year, pegging it at 116 percent.
Secretary General of the organisation, Dr. Mohammed Barkindo, made the prediction concerning investment increase at a dinner at the Oxford Energy Seminar, Oxford University, the United Kingdom, saying investments are expected to pick up slightly this year and in 2018, but, that this would not be close to past levels.
Addressing a gathering of top oil industry players as well as business and political leaders, the OPEC chief said looking ahead of the challenges in the sector, although investments will improve, it is nowhere close to the level of investments made in the past.
Barkindo, who spoke on the topic, ‘Reflection on Recent Market Challenges’, said: “I should stress that there does remain a significant concern looking ahead. This is significantly in regard to the level of investments being made.
“While investments are expected to pick up slightly this year and in 2018, it is clear that this is not in anywhere close to past levels”.
He added that the expected investments are short-cycle rather than long-cycle projects which are the industry’s baseload.
In another development, OPEC reported highest ever level of conformity with the current oil production cuts by its members and non-OPEC producers, rating the level of compliance with the policy at 116 percent.
In a statement on its website, tilted ‘JJMC reports highest ever conformity level’, the group said its rating was as a result of the Joint OPEC-Non-OPEC Ministerial Monitoring Committee, JMMC, based on report of the Joint OPEC-Non-OPEC Technical Committee, JTC, for August 2017.
The JMMC was established following OPEC’s 171st Ministerial Conference Decision on November 30, 2016 and the subsequent Declaration of Cooperation made at the joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on December 10, 2016 at which 11 (now 10) non-OPEC oil producing countries cooperated with OPEC members through voluntary adjustments in total production of around 1.8 million barrels of oil per day.
The resulting declaration which came into effect on January 1, 2017 was for six months.
The second joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, held on May 25, 2017, decided to extend the voluntary production adjustments for another nine months commencing July 1, 2017.
At another meeting which took place in Vienna, Austria in June, President of the OPEC conference, Khalid A. Al-Falih, said conformity level was 100 percent.
OPEC described the current 116 percent conformity level achieved in August as “excellent”, the highest since the start of the Declaration of Cooperation.
“This again underscores the resolute commitment of participating producing countries to cooperate towards the rebalancing of the market,” the statement said.
It said JMMC expressed “satisfaction” with the overall results and steady progress made towards full conformity with the production adjustments, and encouraged all participating countries to continue on the path towards better conformity for the benefit of producers and consumers alike.
The group then added that some participating producing countries have consistently performed beyond their voluntary production adjustments, while others are yet to achieve 100 percent conformity.