Oil & Gas Austria: Rebalancing is on its Way
The 171st Meeting of the Conference of OPEC was recently held in Vienna. The conference took note of oil market developments since it last met in Algeria and reviewed the oil market outlook for the remainder of 2016 and 2017.
The 171st Meeting of the Conference of OPEC was recently held in Vienna, Austria, on November 30, 2016, under the Chairmanship of its President, HE Dr. Mohammed Bin Saleh Al-Sada, Minister of Energy and Industry of the State of Qatar and Head of its Delegation. It observed that global economic growth forecasts were reasonable for both 2016 and 2017, at 2.9 per cent and 3.1 per cent respectively, that non-OPEC supply is expected to contract by 0.8 million barrels per day (mb/d) in 2016, before returning to a growth of 0.3 mb/d in 2017, and that world oil demand is anticipated to grow at healthy levels of around 1.2 mb/d in both 2016 and 2017. The numbers underscore that the market rebalancing is underway, but the conference stressed that OECD and non-OECD inventories still stand well above the five-year average.
The conference said it was vital that stock levels were drawn down to normal levels. The conference also noted the drop off in investment levels in both 2015 and 2016, as well as the huge layoffs the industry has witnessed in recent years. It emphasized the importance of continued investments for an industry that needs regular and predictable investments to provide the necessary supply in the medium- and longer-terms. The conference recorded its deep appreciation to the commitment and valued contribution of the High-level Committee on the implementation of the ‘Algiers Accord’. The committee’s efforts helped form a consensus among member countries on the basis of a proposal put forward by Algeria to implement a new range of targeted production levels.
Accordingly, and in line with the ‘Algiers Accord’, the conference decided to implement a new OPEC-14 production target of 32.5mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the oil market rebalancing forward. The Agreement will be effective from January 1, 2017. The conference also decided to establish a High-level Monitoring Committee, consisting of oil ministers, and assisted by the OPEC Secretariat, to monitor the implementation of the Agreement. Member Countries, in agreeing to this decision, confirmed their commitment to a stable and balanced oil market, with prices at levels that are suitable for both producers and consumers.
In line with recommendations from the High-level Committee of the ‘Algiers Accord’, the conference also agreed to institutionalize a framework for cooperation between OPEC and non-OPEC producing countries on a regular and sustainable basis. The conference underscored the importance of other producing countries joining the Agreement.
The Conference recorded its deep appreciation to the country of Algeria, HE Noureddine Boutarfa and Eng. Mohamed Hamel, Algeria’s Governor for OPEC, for their outstanding contribution to the implementation of the ‘Algiers Accord’.