OPEC’s spirit of cooperation helps balance and stabilize oil market

VIENNA — On 14 Sept., 1960, the five founding fathers of the Organization of the Petroleum Exporting Countries (OPEC), Juan Pablo Pérez Alfonzo of Venezuela; Abdullah Al-Tariki of Saudi Arabia; Dr. Tala’at Al-Shaibani of Iraq; Dr. Fuad Rouhani of Iran; and Ahmed Sayed Omar of Kuwait gathered together in the Al-Shaab Hall in Baghdad.

The historic ‘Baghdad Conference’ saw these five visionaries gathered together around the premise of cooperation and with the need to write their own story. Pérez Alfonzo said after the meeting and the creation of OPEC: “We are now united. We are making history.”

It is a story that encapsulates a family of nations, people and populations, of feelings and emotions of countries rich in culture and heritage, and of the struggle of a group of developing countries to exercise their inalienable right to permanent sovereignty over their natural resources in the interest of their national development.

The history of OPEC is also part of the history of the modern oil industry; a fuel that has been the lifeblood of industrialized nations and helped shape the modern world. Oil is omnipresent in the lives of most people on this planet, accounting for over 30% of the global energy mix. The way people live, work and travel all depend on oil.

Sixty years alone is a monumental achievement for an organization, but especially so for one representing one of the most volatile commodities — oil. Since the early 1970s we have seen seven major market cycles, including the latest in the wake of the COVID-19 pandemic, each of which has seen severe and sudden imbalances threaten the oil market and global economic development.

Throughout the organization’s history there have been one recurring theme that has transcended across the decades and guided the organization’s work to support sustainable oil market stability: cooperation.

This has come in the form of building the organization from the five founders in September 1960 to the 13 members today; evolving dialogues, bilateral and multilateral, with other producers and consumers; establishing the OPEC Fund, now the OPEC Fund for International Development in 1976, to help address, among other things, energy poverty; and in OPEC’s involvement in the UN climate change talks since they began in 1991, and in the continued support of the Paris Agreement.

This is not an exhaustive list, but underscores some of what has been accomplished through cooperation over the decades.

The most recent demonstration has been through the Declaration of Cooperation (DoC) that helped restore balance, stability and confidence to the oil market in 2017-19, following the downturn of 2014-16, and has played a major role in reviving the oil industry on the back of the unprecedented oil demand impact as a result of the COVID-19 pandemic.

The decisions taken by the 23 DoC countries in April and June 2020 were well-informed and well-communicated and provided reassurance to the market that the DoC group is proactive and fully observant of the ever-evolving oil market fundamentals.

The spirit of cooperation that guided the founding of OPEC in Baghdad back in September 1960 has been clearly present in the decisions taken in 2020. The idea that the five founder members of OPEC were stronger together 60 years ago was channeled into the response of DoC participants as they responded to the COVID-19 pandemic.

The DoC has been a platform that has built on OPEC’s previous cooperative efforts and has also instilled a platform for the future through the endorsement in 2019 of the Charter of Cooperation (CoC).

The forward looking trajectory that underpins the CoC means that it is an important platform for participating countries, not only in helping maintain a sustainable oil market stability, but also in evolving a future for oil and all energies in the energy transition.

The challenges the oil market faces in sustaining balance and stability requires the participation of all stakeholders. The challenges our planet faces requires comprehensive solutions — no single energy source is a panacea — and the need to look for cleaner and more efficient technological solutions everywhere, across all available energies.

When tackling emissions there are many avenues to take and we need to pursue them all. There needs to be an appreciation of the nuances in the debate, balancing the needs of people in relation to their social welfare, the economy and the environment.

In looking ahead, OPEC reaffirms its faith in the need for broader and deeper dialogue and cooperation and the need for respect among all participants in the energy community. We are open to engage with all stakeholders. We can no longer work in silos; we can no longer see our futures in polarized terms.

We need to talk to each other and not at each other. We need to ensure sustainable growth, development and prosperity for ourselves, for our children and for our children’s children.

— The writer is OPEC Secretary General

Source: https://saudigazette.com.sa/article/597957/BUSINESS/OPECs-spirit-of-cooperation-helps-balance-and-stabilize-oil-market


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