Refined Ideas

OPEC’s overarching ambition is to minimize price volatility in the market. What measures and strategies do you have in the event that oil price drops below the USD50 band?

Firstly, let me stress that OPEC does not have a target price. The voluntary production adjustment decisions taken last year by 24 participating countries in Vienna at the 171st Ministerial Conference on November 30, 2017, and the Declaration of Cooperation between OPEC and non-OPEC producers on December 10, 2017, were specifically focused on bringing forward the market rebalancing, and accelerating the drawdown of the stock overhang to the five-year average. The collaborative and timely developments were taken to address the prevailing market realities, which should then lead to the oil price finding its equilibrium level. In terms of volatility, I think all producers, in fact all consumers, would like to minimize price volatility. This is natural. What we need to recognize is that short-term price fluctuations caused by such issues as geopolitics, supply disruptions, economic developments, and weather are natural. They are unavoidable. It is clear we cannot avoid speculation and volatility altogether. However, it is important that we differentiate between such normal fluctuations and those that can be viewed as extreme. Extreme price fluctuations are clearly not conducive to the effective functioning of the market, particularly given the long-term nature of investments in our industry.

Qatar’s oil output is slated to be lower by more than 11% YoY in 2017. How well has Qatar performed in the implementation of OPEC’s decision to voluntarily adjust oil production?

Qatar is a major global energy player. While its oil production has fallen gradually in recent years, its natural gas production has continued to increase YoY. It is now a global hub for liquefied natural gas, and ideally positioned for the growing energy demand center of Asia. In terms of the implementation of the OPEC and non-OPEC decisions taken in 2016, Qatar has played an important role, as have all participating nations. To date, conformity with the decisions has been good. In the first three months of 2017, we saw overall OPEC and non-OPEC conformity at 86% in January, and a further advancement in February to 94%. In March, it was at the even higher level of 98%. We continue to seek further improvements, with our firm goal being 100% conformity.

In January 2017, you held a meeting with Qatar’s Minister of Energy & Industry. What were the main points of that discussion and how do you assess Dr. Al Sada’s role as OPEC’s Conference President throughout a challenging 2016?

Back in January 2017, I paid a visit to HE Dr. Mohammed bin Saleh Al-Sada to thank him personally for the great diplomatic efforts he undertook throughout 2016 as OPEC Conference President to bring OPEC and non-OPEC producers together. His judgement, guidance, and dedication in helping OPEC Member Countries agree on a production adjustment decision, and in bringing on board many non-OPEC nations, were a cornerstone of the great efforts aimed at rebalancing the market, supporting sustainable stability, and ensuring that the necessary industry investments return. His unwavering leadership in an extremely challenging 2016 went far beyond the scope of the Organization and helped to positively guide producers, and the industry as a whole. His term as OPEC Conference President in 2016 will no doubt be viewed as a momentous milestone in the Organization’s history. It was an honor for the Organization to hear that His Excellency was awarded “International Oil Diplomacy Man of the Year 2016″ at the International Petroleum (IP) Week conference in London in February 2017. This was a richly deserved recognition.

Qatar’s new Laffan Refinery formally launched operations in 1Q2017. How important is this project in the supply of petroleum products to the global market?

The Laffan Refinery is a key part of Qatar’s vision to process and add value to the field condensate produced from its Qatargas and RasGas ventures. The recent addition of the second refinery in the first quarter of 2017 has doubled condensate refining capacity at the complex to 292,000 barrels a day. There is no doubt that this development will be a vital new cog in the global supply of petroleum products. The development is also in line with the principles of Qatar National Vision 2030, which aims to create a sustainable economy and advance the standard of living in Qatar. The vision is to be applauded, and the OPEC Secretariat supports its implementation as the country looks to advance its economic, social, human, and environmental development.