The Organisation of Petroleum Exporting Countries (OPEC) has said that more than one-third of the 24 countries currently working together under a negotiated framework to cut down oil outputs and inventories, to stabilise prices in the global market were from Africa.
It explained that these countries included Algeria; Angola; the Republic of the Congo; Equatorial Guinea; Gabon; Libya; Nigeria; Sudan; and South Sudan, adding that they were contributing to the oil market stabilisation efforts it initiated with non-OPEC oil producer led by the Russian Federation within the Declaration of Cooperation framework reached in 2016.
Speaking at a recent conference organised by the African Petroleum Producers Organisation (APPO) in Equatorial Guinea, OPEC’s Secretary General, Dr. Mohammed Barkindo, also stated that the cartel recognised the need for more oil inventories to drop despite some healthy developments from their observation of the agreement to cutback their production levels to rebalance the market.
When looking at the ‘Declaration of Cooperation’ it gives me great pleasure to say that over one-third of the 24 participants are from Africa: Algeria; Angola; the Republic of the Congo; Equatorial Guinea; Gabon; Libya; Nigeria; Sudan; and South Sudan.
Moreover, half of OPEC’s Membership comes from this continent of Africa. This underscores the vital role this great continent plays within OPEC, within the ‘Declaration of Cooperation’, and within the global oil industry,” said Barkindo.
He explained that in terms of oil, Africa has around 130 billion barrels of proven crude oil reserves; an increase he noted was around 50 per cent since the end of last century.
And in terms of proven natural gas reserves, the figure is over 15 trillion standard cubic metres, a number that has more than doubled since the mid-1980s.
It is irrefutable evidence of the petroleum potential of Africa, the exciting and abundant opportunities, and the role that this industry can play in unleashing tremendous economic development and prosperity across the continent,” he added, while calling for countries of the continent to build alliances to make the most of their hydrocarbon resources.
Turning to the status of the oil market, Barkindo, stated that the OPEC recognised the current, critical uncertainties surrounding the global oil market throughout 2019, and stressed on the shared responsibility of all participating countries in the ‘Declaration of Cooperation’ to sustain market stability and prevent the recurrence of any market imbalance.
He explained that: Every country understands the importance of achieving full and timely conformity with their voluntary production adjustments under the decisions of the 175th Meeting of the OPEC Conference and the 5th OPEC and non-OPEC Ministerial Meeting, on the 6 and 7 December 2018.
“Overall conformity levels to the new voluntary production adjustments, reached almost 90 per cent for the month of February 2019, which is up from 83 per cent in the month of January. We expect them to improve further in the coming months.
While we have seen a marked improvement in market conditions in the 1Q19, compared to the turbulence and volatility of the 4Q18, with the market steadily moving towards a more balanced state, we still believe we need to see inventory levels drop further.
According to him, “We also recognise the fact that underlying risks remain, such as ongoing trade negotiations, monetary policy developments, as well as increasingly complex geopolitical challenges and climate change-related concerns.
Additionally we need to see a further pick-up in industry investments, particularly for long cycle projects. We need to remind ourselves that exploration and production spending fell by an enormous 27 per cent in both 2015 and 2016, and only increased by 8 per cent in both 2017 and 2018.
He added that it was for these reasons that the cartel and its partners have continued to take a very measured approach through the ‘Declaration of Cooperation’, saying, we look at the economic and market outlook, and we listen to consumers and other stakeholders.
The ‘Declaration’ is not about short-termism. We are focused on continuity; we are steadfast and completely unwavering; we have long-term objectives and goals.
This was exemplified in Baku through further statements of support by participating countries for a permanent intergovernmental platform, under the Charter of Cooperation between Oil Producing Countries,” he added.