The Sultanate supports continued coordination between OPEC and non-OPEC producers that would help balance market demand and supply well beyond the expiry of the current ‘Declaration of Cooperation’ agreement at the end of this year. This was affirmed here yesterday by Dr Mohammed bin Hamed al Rumhy (pictured), Minister of Oil and Gas, ahead of the 7th Joint Ministerial Monitoring Committee (JMMC) meeting of OPEC / non-OPEC producers, which began at the Grand Hyatt Muscat.
“There is consensus among both OPEC and non-OPEC members (that are party to the Declaration of Cooperation) that there is merit in continuing with some kind of understanding between the two sides (beyond the expiry of the pact at the end of this year). We in Oman support that,” Dr Al Rumhy commented. Non-OPEC Oman is one of 24 producers that signed off on the landmark ‘Declaration of Cooperation’ in December 2016, committing signatories to voluntary production adjustments widely credited with helping stabilise the global oil market. The Sultanate is also hosting the 7th JMMC meeting in its capacity as a member of the ministerial monitoring panel.
Speaking to a group of visiting international Oil & Gas journalists, Dr Al Rumhy said the fate of the current Declaration of Cooperation will be decided later this year as the overhang in global crude stockpiles is projected to decline.
“By the end of the year, the stock overhang will be small. And that’s the time when we will be ready the discuss the agreement. We will look at whether to continue with the current agreement, or perhaps whether we should have another type of agreement; I remember a few years ago, we were talking about an (output) freeze, and so on. So these are ideas we will be discussing in Vienna in November this year.”
The global oil industry, the Minister pointed out, has a “responsibility” that goes beyond just the remit of a cooperative arrangement between OPEC and non-OPEC producers. “I think it’s important for all of us to take responsibility for energy. Energy is a serious business. Whether we are a member of a club or not, we still take responsibility because we are members of the international community. We need to take responsibility on how we manage supply of energy to the world.”
The JMMC’s mandate, Dr Al Rumhy said, was not to “fix or fiddle with” oil prices, but to monitor compliance by participating producers and evaluate market fundamentals driving price movements. “From our point of view, the price movement is healthy for the world economy and for investment,” Dr Al Rumhy said. “I think we are moving in the right direction. The price of $40-$50 was too low to encourage us to create a sustainable business for the coming years.”
An issue of key concern for the oil industry, which has not been discussed a lot, is the lack of investment, particularly from the oil majors since 2014, he lamented. “Only a few IOCs have been really investing since 2014 — more than 2013 — and the only investment was coming from NIOCs, particularly in the Gulf countries. Hence you see the decline, and many of the cuts that we agreed there, is the result of repairs, shutdowns, and so on, that are being managed in order to meet the promised cuts.”
Earlier, speaking to the Observer, Dr Al Rumhy voiced his delight to play host to a distinguished gathering of OPEC and non-OPEC energy ministers. “We are very happy to have all of these dignitaries in Muscat. We don’t normally host such distinguished teams from OPEC and non-OPEC. It’s a proud moment for all of us. My hope is that there is a consensus to maintain the status quo and continue on what we agreed until the end of the Declaration of Cooperation agreement later this year.”