The
Organisation of Petroleum Exporting Countries (OPEC) lost over
$1trillion in revenues from the drop in crude prices globally, the
Secretary-General of the body, Mohammad Sanusi Barkindo, has said.
The OPEC chief, in a chat with reporters
at the ongoing meetings of the International Monetary Fund (IMF)/The
World Bank Group in Washington DC, said the energy sector also suffered a
cumulative investment loss of 26 per cent and 22 per cent in 2015 and
2016.
The prospects for 2017 do not look any better, he said.
His words: “OPEC member nations have in
the last three years lost over $1trillion in terms of revenue. In terms
of investments into this industry, we have seen over 26 per cent
reduction in 2015 and in this year so far, we are predicting a further
contraction of about 22 per cent. And as I had mentioned in plenary, the
prospects for 2017 are also looking very bleak.”
He lamented that for the first time in
recent memory, OPEC is not only having three consecutive years of
depressed oil prices, but also seeing contraction in capital investment,
particularly in the upstream for three consecutive years.
Barkindo warned that “this is a very
serious development that is threatening future supplies to the global
community with the consequences on the fragile state of the economies”.
What most forecast agencies failed to
get correctly was the length of time it was going to take for the market
to rebalance, he said, pointing out that it was not only OPEC that
missed the target, “but most agencies, including the IMF and World Bank
which came up with models that were found wanting.
“Nobody expected this cycle to last this
long and with the severe consequences on the huge revenues that we have
lost,” Barkindo said, adding: “This is perhaps the longest cycle that
we have seen in recent times, it’s taken us now into the third year of
this correction.”
Barkindo said in response to the threat
to the global economy as a result of shocks from the fall in crude oil
prices, OPEC, on the 28th of September, “ took a proactive and timely
decision to agree on a range of ceiling of 32.5 million barrels per day
to 33 million barrels per day production for its 14 members” “This is
the first time that OPEC has taken such a decision since 2008.”
The objectives of this decision, said
the OPEC chief, “was to restore stability in the market and address the
issue of high inventories,” which he put at a billion barrels,
“depressing prices”.
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