‘OPEC isn’t a cartel, doesn’t fix oil prices’
OPEC, Russia draft cooperation charter offers no formal body
CAIRO, Feb 11, (RTRS): OPEC Secretary-General Mohammad Barkindo said the exporting group was not in the business of fixing oil prices, when asked on Monday to comment on a US House committee passing a bill targeting OPEC oil supply cuts.
A US House of Representatives committee approved a bill on Thursday that would open up the Organization of the Petroleum Exporting Countries to antitrust lawsuits, but it was uncertain if the measure would be considered by the full chamber.
“OPEC is neither a cartel nor involved in the business of fixing oil prices,” Barkindo told Reuters. “It would be a misjudgment to accuse us of such,” he said on the sidelines of an energy forum in Cairo.
OPEC and a group of non-OPEC countries including Russia, an alliance known as OPEC+, are reducing oil output in 2019 to avoid a potential supply glut that could weigh on prices. A similar action in 2017 got rid of an earlier supply glut.
“OPEC is an open, transparent organisation focused on assisting the oil markets to remain in balance on a sustainable basis, which is a fundamental requirement of investors,” Barkindo said.
“The international oil industry needs market stability to plan and invest in a predictable manner in order to guarantee future supplies.”
Scared by looming US anti-cartel legislation for the oil industry, the Organization for the Petroleum Exporting Countries and its allies such as Russia have decided against creating a formal body, at least on paper.
A draft of a document – setting up a new alliance and dated January 2019 – and seen by Reuters carefully avoids any mention of sensitive issues such as oil prices, market share and production cuts.
OPEC and Russia have been cutting production together to support prices since 2017, after clinching a deal in December 2016, in moves that have provoked criticism from US President Donald Trump.
A committee of the US Congress passed legislation, known as the No Oil Producing and Exporting Cartels Act, or NOPEC, last week.
The draft says OPEC and Russia will discuss creating “a mechanism” rather than “an organisation” when they meet in April 17-18 in Vienna, calling for the creation of an “Alliance of Oil Producing Countries”.
“It looks genuine. It’s also been updated since,” an OPEC source said without giving any further details.
Russia’s energy ministry declined to comment.
The objectives of the alliance are listed as setting up “an intergovernmental platform to facilitate dialogue” and “further strengthen the collaboration in the formulation of policies aimed at promoting oil market stability”.
The objectives are due to be achieved by promoting a better understanding among its members of energy market fundamentals as well as “permanent dialogue among oil producing countries”, according to the document.
Russia is not an OPEC member and has said it does intend to join the organisation on a permanent basis. OPEC and Russia jointly produce more than 40 percent of the world’s oil.
The idea of an organization of OPEC and non-OPEC countries has been mooted since joint efforts to stabilise oil prices have come to fruition.
Russian Energy Minister Alexander Novak said in December a joint OPEC and non-OPEC structure seemed unlikely due the additional red tape it would create as well as the risk of US monopoly-related sanctions. The draft document also foresees ministerial meetings twice a year and regular encounters of technical experts.