Fujairah: Opec (Organisation of the Petroleum Exporting Countries) is looking at having a long-term cooperation agreement in place with non-Opec members by December, which will bring stability to oil markets, Opec secretary general Mohammad Barkindo said in Fujairah on Tuesday.
Opec is currently cooperating with non-Opec members such as Russia as part of an agreement called the Declaration of Cooperation to reduce production by about 1.8 million barrels per day to prop up oil prices.
The agreement was subsequently changed in the last Opec’s meeting in June and oil producing countries decided to increase production by about one million barrels per day as rising oil prices were dampening demand and creating problems for high oil consuming countries like India and China.
Speaking at the Gulf Intelligence Energy Markets Forum in Fujairah, Barkindo said the Declaration of Cooperation has become a permanent feature in the global energy scene and will continue to stay.
“What we are working now is to make it [Declaration of Cooperation] more permanent and institutionalise the framework. Our target is to have a longer cooperation framework in place by December when we reconvene in Vienna,” Barkindo said.
He also expects oil demand to grow in the foreseeable future with oil and gas dominating the energy basket until 2040.
“What is required now and is also of great concern not only for us but also for consumers is the ability to continue to attract investment in the predictable fashion to meet the current oil demand and also the future demand,” he added.
Speaking on the current oil market, he said it continues to evolve with both fundamental and non-fundamental factors impacting the oil market.
“We are focusing on two things. One is on restoring the stability, both for us as well as for consumers and investors. Two, how do we together sustain the stability going forward in the face of geo-political tensions we are facing in different parts of the world,” he said. “Our industry is put on [the] defensive but we are committed to make sure that we deliver to meet the current demand and also growing demand in the medium to long term.”
Iran oil exports
On the issue of falling Iranian exports due to the reintroduction of sanctions by the US administration, Barkindo said they will continue to work with all parties to stabilise oil markets.
“Iran is not only a founding member of Opec and it is an important member of Opec. It is a third biggest producer within Opec so together we will have to work with all parities not only to confront current challenges that are emerging but also together fashion a way moving forward,” he said. “Our interest is to make sure that we will continue to be a reliable and dependable supplier of oil to the global market.”
Iranian exports have been falling following a decision by US President Donald Trump to reimpose sanctions on the Islamic Republic earlier this year.
According to Dr Sara Vakhshouri, president of SVB Energy International based in Washington DC, oil exports from Iran have already reduced by about 550,000 to 600,000 barrels per day in August when the first round of US sanctions kicked in and the figure is likely to go up to 1.4 to 1.5 million barrels per day in September.
Arjuna Ranatunga, minister of petroleum from Sri Lanka, who also attended the forum, said they stopped taking Iranian barrels due to sanctions.
He also said the country is looking to build a new refinery with a capacity of about 110,000 to 125,000 barrels to meet the growing oil demand. It will take about four years to finish and they received proposals from Chinese, Korean, Middle East and Singapore firms, said Ranatunga.
“We will build the new refinery and may be get rid of the old one after the production,” he added.
The Ruler of Fujairah and Member of the UAE Supreme Council, His Highness Shaikh Hamad Bin Mohammad Al Sharqi, welcomed on Tuesday to the Royal Palace a delegation of guests, led by Barkindo.
Barkindo was joined by Ranatunga, and Dr Matar Al Neyadi, Undersecretary Ministry of Energy and Industry, UAE, along with Martin Fraenkel, President S&P Global Platts, and Malik Jaffar, Regional Director Petronas Middle East, according to a statement.