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”.