There is no lessening of relevance for OPEC

In its 60th year, the organization will continue to carve a strategic role for itself and oil
OPEC remains steadfast in being the bellwether for the oil industry. And whatever be the changes on the energy front, this influence will remain unshaken.

On September 14, 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 in the Al-Shaab Hall in Baghdad.

The ‘Baghdad Conference’ saw these five visionaries put up 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 percent of the global energy mix. The way people live, work, and travel all depend on oil.

Been through the best… and worst

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 has been one recurring theme that has transcended across decades and guided the 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 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.

Restore the balance

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 demand impact as a result of the pandemic.

The decisions taken by the 23 DOC countries in April and June 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.

Original purpose unchanged

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 require comprehensive solutions – no single energy source is a panacea – and the need to look for 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 engaging 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.

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