OPEC’s Secretary General Mohammad Barkindo floated the idea of institutionalizing the OPEC supply cut agreement in October, 2017. OPEC photo.
OPEC supply cut agreement began in January 2017
United Arab Emirates’ Energy Minister Suhail Al Mazrouei told The National that by the end of the year, a super group of oil producing countries will have a plan in place to institutionalize the OPEC supply cut agreement.
The OPEC deal involves 24 cartel members and non-members, including Russia. The pact that saw participants cut a total of 1.8 million barrels per day (b/d) in production has been credited with helping oil prices recover after the 2014 collapse in the oil market which saw oil prices drop to below $30/barrel.
Al Mazrouei said a draft framework for the long-term alliance is expected to be finalized this year.
The goal is “together with the (OPEC) secretary general (Mohammad Barkindo), to put together a draft agreement for this group (of 24) to stay together for a longer time”, he told The National.
According to the report in The National, officials are optimistic there is strong support for making the OPEC supply cut deal a more permanent fixture of energy markets. Barkindo said earlier in the week that the “building blocks” for institutionalizing the partnership will soon be in place.
Last month, Khalid al-Falih, Saudi Arabia’s energy minister said the kingdom’s alliance with Russia will continue for “decades and generations”. And on Wednesday, Saudi Arabia and Russia announced plans for joint investments.
Al Mazrouei says there has been a “lot of learning” amongst the group of 24 pact participants and that trust levels within OPEC have risen since the summer of 2016. He says he cannot see why “we cannot continue to work in the future, it’s (down to) what framework we deliver together with the secretary general to ensure we are giving something reasonable for everyone to adapt”.
The institutionalization of the OPEC supply cut agreement comes at a time when renewable energy is becoming a bigger factor in the market. Al Mazrouei says he and OPEC are not concerned about the shift.
“We are promoting the discussion and collaboration between the different forms of energy to achieve a better world in the future,” al Mazrouei told The National.
He added that OPEC is aware of its responsibilities to the global economy and the impact that unbalanced energy markets can have on economic growth.
“All the member countries are mindful of their role in market stability and forget everything else. When we meet, when we discuss, we discuss the benefits to the markets, benefits to the member countries, and the benefits to the world economy. This is how we stay focused. We don’t concentrate on our differences, we concentrate on what unites us and those goals,” he said.