…Investments choked-off by 27% in 2015, 2016
OpeOluwani Akintayo
20 February 2018, Sweetcrude, Lagos – Secretary-General of the Petroleum Exporting Countries, Mohammed Barkindo has said the OPEC Reference Basket price fell by 80% between June 2014 and January 2016,
Barkindo, who made the statement in his keynote address at the maiden edition of the Nigeria International Petroleum Summit, in Abuja, said as a result of the fall, investments were choked-off, with exploration and production spending falling by an enormous 27% in both 2015 and 2016.
The OPEC Reference Basket, ORB, also referred to as the OPEC Basket, is a weighted average of prices for petroleum blends produced by OPEC members. Since January 1, 2017, the OPEC reference basket consists of a weighted average of the following crudes: Saharan Blend (from Algeria) and Girassol (from Angola).
Oil prices crashed from around $120 per barrel to an all-time low of $20 per barrel in 2014 as a result of the glut in the market.
“Nearly one trillion dollars in investments were frozen or discontinued, and thousands of high-quality jobs were lost,” Barkindo said.
As a result, OPEC and its partners, especially Russia, held a Declaration of Cooperation, agreeing to cut a combined 1.8 million barrel per day of output from January 2017 to boost oil prices.
The agreement, which recorded over 100 percent conformity, has since rallied oil prices to $70 per barrel as at January this year.
The OPEC Secretary General continued: “A record number of companies in our industry filed for bankruptcy.
“Our industry was on life-support and a medical breakthrough was necessary to revive it. Thankfully, a breakthrough came in the form of the historic Declaration of Cooperation, which the Minister (Nigeria’s Ibe Kachikwu) played a key role in securing the adoption of. This landmark decision was the culmination of the extensive consultations undertaken throughout 2016, which aimed to build consensus about the strategic urgency of rebalancing the global oil market in a collective manner”.
Barkindo said from 2014 to 2016, world oil supply growth outpaced oil demand, with world oil supply growing by 5.5 mb/d while oil demand increased by 4.1 mb/d.
By July 2016, the Organisation for Economic Co-operation and Development, OECD commercial stock levels reached a record high of about 386 mb over the five-year average, he added.
The first Declaration of Cooperation was agreed upon on December 10, 2016 in Vienna by twenty-four countries.
It was extended for another nine months commencing on the July 1, 2017 at the OPEC non-OPEC ministerial meeting held on May 25, 2017.
Following the third OPEC and non-OPEC Ministerial Meeting on the November 30, 2017, the Declaration of Cooperation was amended to cover the entirety 2018.
