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H.E. Mohammad Sanusi Barkindo

UAE, ABU DHABI - Diplomacy

Position of Power

Secretary General, Organization of Petroleum Exporting Countries (OPEC)

Bio

His Excellency Mohammad Sanusi Barkindo of Nigeria began his tenure as Secretary General of the OPEC on 1 August 2016. Over the years he also worked in several key roles at OPEC. In 1986, he was appointed to Nigeria’s delegation to OPEC, and from 1993 to 2008, served as Nigeria’s National Representative on the Organization’s Economic Commission Board. In 2006, he was Acting OPEC Secretary General, and represented Nigeria on OPEC’s Board of Governors from 2009 to 2010. From 2009 to 2010, he was Group Managing Director and CEO of the Nigerian National Petroleum Corporation (NNPC). He has also been leader of Nigeria’s technical delegation to the UN climate change negotiations since 1991. He served as Chair of the Group of 77 and China at the UNFCCC and was elected to serve three terms as Vice President of the Conference of the Parties — COP13 (Bali, Indonesia), COP14 (Poznan, Poland) and COP15 (Copenhagen, Denmark), where he chaired the opening session.

“Many countries, the UAE included, are looking toward alternative energy sources.“

With your recent appointment as Secretary General of OPEC, which areas have you set as priorities in your agenda?

When I took the position in August I felt the scope of the tasks and challenges in front of me required my immediate and undivided attention. My priority as I saw it was to address the problems affecting the oil market and its principle players, primarily OPEC’s member countries. Since the middle of 2014 the industry has been struggling to cope with one of the most difficult cycles in its history. We have gone through similar periods in the past, but nothing perhaps so prolonged or as potentially damaging as the present downturn, which has left its mark on all facets of the industry. Today, we are still facing great uncertainty, characterized by an unstable market, excess crude oil production, and volatile crude prices which continue to lie at levels that are not meeting stakeholders’ needs and pose a genuine threat to future investment in the sector. Add to these conditions of dwindling revenues, excessively high petroleum stocks, and huge manpower layoffs throughout the entire industry chain and one can fully appreciate the extent of the predicament we are in. Therefore, sustainable stability is really our watchword, as it has been since OPEC was formed over half a century ago. I cannot stress enough how without a stable market and predictability of price we cannot plan for the future with any relative certainty. Stability is essential for future petroleum output expansion to flourish and it is required for economies around the world to grow and for governments to plan their budgets. That is why the historic agreement reached at the 171st Meeting of the OPEC Conference in Vienna at the end of November 2016 is so important. By agreeing to reduce production, together with non-OPEC producers, I am confident we can get back on the road to recovery more quickly and remove the destabilizing conditions we have all been suffering under for far too long now.

OPEC’s ‘Algiers Accord’ in September, followed by the organization’s Vienna agreement at the end of November to set production caps among member states, has been extensively welcomed by global markets. What is the significance of this move to revamp the global oil industry, and what will be the particular benefits for OPEC member countries?

I have indeed been very fortunate in my first four months in office to have been part of not one, but two historic OPEC agreements that promise to speed up the rebalancing of the oil market. The landmark decision taken at the 170th Meeting of the OPEC Conference in Algeria at the end of September, committing the organization to a production adjustment came after many rounds of consultative meetings and intensive talks. Most significantly, the Algiers Accord paved the way for the momentous decision taken at the 171st Meeting of the Conference in Vienna at the end of November to reduce total OPEC output by a considerable 1.2 million barrels/day from 1 January 2017. And yes, the agreement was extensively welcomed by global markets, with the resultant 13% hike in crude oil prices proof of that positive resonance. This agreement was strengthened further with the subsequent announcement by the Russian Federation that it would also reduce its production by 300,000 b/d next year. It means that, at the very least, 1.5 mb/d of crude oil output will be removed from the market in 2017, which will be an instrumental factor in bringing about oil market stability, especially in eliminating the stock overhang that has continued to pressure prices. This agreement is the first by the organization since the height of the global financial crisis eight years ago and is the result of a lot of hard work and intensive shuttle diplomacy talks among both OPEC and non-OPEC producing nations, in pursuit of action deemed essential for correcting the market imbalance. Obviously, it will take time for the production adjustment to filter through to the market, but as we see it, what is important is that it will accelerate the ongoing drawdown of the crude stock overhang and bring the rebalancing of the market forward. As we have learned from past experiences, once stocks start to fall on a steady basis, then prices start to improve. And a reasonable crude price level is critical to supporting investment in the new capacity the sector will require in the expanding years ahead. We in OPEC believe the November agreement will not only be beneficial to the global oil market and the economies of our member countries, but also to the consumers and the health of the world economy as a whole. Most importantly, such equilibrium is vital for providing member countries with a fair return on the exploitation and export of their exhaustible natural resources. OPEC member states might be endowed with precious and valuable energy resources, but we must not forget that they still face the same obstacles and challenges as other developing countries, hence a regular income that fuels economic growth is a key requisite for ensuring a prosperous future.

OPEC’s 2016 World Oil Outlook (WOO) was launched outside of Vienna for the first time and you chose the UAE to hold it in. What are the highlights of the mutual cooperation between OPEC and the UAE?

Time proved this decision was the right one. We felt that by attaching the WOO launch this year to a major industry event, in the form of the high-profile ADIPEC, we would get maximum exposure. And we did. It was a resounding success. It was also extremely beneficial for the organization to have such an event in one of its member countries. Over the years, the OPEC secretariat has forged great links with member states and the UAE has proven to be no exception. With its vibrant economy and fascinating high-tech development, I am certain it will continue in the same vein, and remain a valued and trusted member of the OPEC family. Our visit to ADIPEC proved to be an excellent opportunity to extend those relations further. In fact, also for the first time, we chose Abu Dhabi as the location to unveil a new app version of OPEC’s other flagship publication, the Annual Statistical Bulletin (ASB). This was done at a press conference one day before the WOO launch. Significantly, the app’s development was achieved through a joint IT project team involving the UAE Energy Ministry and the OPEC secretariat. It was another example of how OPEC and its member countries are working together to improve ties and ultimately conditions in the global oil sector.

How would you assess the participation of the UAE’s national oil companies in the construction of a stable global market?

The UAE has made startling economic and technological progress over the years and stands today as an accomplished and highly-respected member of the global community. Obviously, with petroleum fueling its development, the national energy companies have had a very important role to play. Through the capable operations of the Abu Dhabi National Oil Company (ADNOC) and its many subsidiaries, the country has secured a sound economic footing that will continue to pay dividends going forward. These companies, through the application of best practices, continue to forge agreements with international oil concerns that result in the optimum management of the UAE’s petroleum resources. Over the years, these national entities have gained considerable experience and knowledge of the industry and the authoritative and responsible way they conduct themselves and do business with the outside world has a direct bearing on the stability of the oil market. Consumers need to know that the oil and gas they require for their domestic needs will always be available and, in the UAE, as well as other OPEC producers, security of supply is assured. And that is ultimately down to companies such as ADNOC and the UAE’s other energy firms. In the future, the UAE and OPEC member countries in general will be required to supply even more oil to global markets, so it is indeed reassuring for the consumers to know that ultimately they can always rely on these ever-evolving national oil companies for their needs to be met.

With the current plans of the UAE government to reduce its dependence on the oil industry to below 50% of national demand, how will this transform the dynamics between other OPEC members and the UAE?

The countries that make up this organization have reached a superior level of understanding, having spent over half a century working together on reaching a set of goals that are common to all of them. Over this long period, there have naturally been many ups and downs, but through it all members have shown a sense of unity that I think is unique to any international organization. What is striking is the great understanding they exert of each other’s needs and situations, an approach that has shone through in the many informed decisions OPEC has taken over the decades. There is no doubt in my mind that this family camaraderie has enabled the organization to remain relevant and effective on the world stage and an essential element in the welfare of the global economy. OPEC has actually gone from strength-to-strength over the years. Each OPEC sovereign nation has its own needs, yet under the umbrella of the organization, members time and again display an attitude that puts sacrifice before self-interest. That is extremely commendable and one of the factors that makes OPEC so unique. Concerning the UAE’s aim to reduce dependency on the domestic energy industry, it is indeed a notable quest and one that makes perfect sense. In fact, other OPEC member countries are following the same path, knowing full well that there will come a day when the oil that helped build up their nations will no longer be in abundance. Many countries, the UAE included, are looking toward alternative energy sources to supplement their domestic needs. They include renewables, such as biofuels, solar, and wind power. These other sources of energy will not take the place of conventional fossil fuels, but they will gradually increase their share in the overall mix. Many oil industry experts, OPEC included, consider that the global economy will require all forms of energy to satisfy its growing needs in the years ahead. As for the UAE, in rationalizing its use of petroleum, it will be able to keep more resources in the ground, making reserves last longer for future generations.

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