The head of OPEC talks about production cuts, price volatility and Russia’s war in Ukraine and its impact on oil prices.
Ministers of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, will meet virtually on February 1. This meeting is held while the price of oil has increased to 90 dollars per barrel. In Abuja, Nigeria, Al Jazeera’s Fidelis Mba spoke to OPEC chief Gabriel Mbaga Obiang Lima – who is also Equatorial Guinea’s hydrocarbons minister – about the issues facing the organization. This piece has been edited for clarity.
FM: Will you do anything to increase production or will you stick to the recently announced production cut?
Lima: I think the approach that we’ve had from organizations is watch and watch, and why I say watch and watch is because there’s a lot of uncertainty going on in the market. Change in the week, month, day and what we do is monitor what is happening in the market. I will give you the best example. The opening of China is another example of the conflict between Russia and Ukraine. So really, these are all factors that we put together and when we do that, that’s when we evaluate what we need to do.
We want to remind you that one thing OPEC does not control is price. What OPEC does is to ensure the stability of supply and demand. So it’s very important that we watch and monitor and make sure that the consumer … always gets the product. So at this moment it is really irresponsible to say that either the quota is going to go up or down. Let’s have the data first, let’s see what happens through the new China opening, let’s see our future expectations for the product and then from there as a block we can make decisions.
Foreign Minister: So, does this mean that the issue of oil production policy will be discussed at the meeting of the OPEC Joint Ministerial Oversight Committee on February 1st?
Lima: What I’m saying is that it doesn’t come up. There are many factors that we have to consider, including major OPEC members such as Venezuela, Iran and Libya, which have many of them. [challenges] With production, you know that one day they are producing and the next day they are having problems. So before that meeting we have an internal meeting where we evaluate such things.
The way it is now, the world needs oil to continue to develop, to continue to grow, so we need to make sure that we can continue to supply. And it’s not just OPEC members. This is also non-OPEC members and others. We will monitor what happens, we will have a meeting before our February meeting and we will decide for that February meeting what to do. But now it looks like there is a need for this product more than ever. So obviously we have to make sure that we can continue to supply the market. This product is essential for economic recovery rather than restricting it.
Foreign Minister: So why is the United States accusing OPEC of cutting production in favor of Russia?
Lima: OPEC is not a political organization. Secondly, OPEC does not have a dispute with anyone. What OPEC does is it gathers information about producers and we gather information about consumers and then OPEC makes a rational decision. It is not political. It is not for the benefit of one country or another. So when people say that we support one and the other is really irresponsible. This is not true and it is clear that we are taking care of consumers at the same time because you have to remember that the only thing that everyone wants is a sustainable product.
When you have product consistency, you can manage a better economy. We want stability. If you have stability at $20, $80, $100, that’s what you want for the longer term because that’s what you can manage. So anything about OPEC’s opposition to one or the other is more of a guess. You have to remember one thing, brokers are traders. These are really the keys to those who want to generate so much price volatility. OPEC does not want volatility. OPEC is there to evaluate the data and whatever the data tells us, that’s where we act on it.
Foreign Minister: How has the war between Russia and Ukraine affected the energy sector and its impact on the global economy?
Lima: I’m the head of OPEC and also the head of the Gas Exporting Countries Forum (GECF), so it’s oil and gas, obviously. We have made an impact in gas as well as in oil now. The issue is that some people think that it is very easy to switch production from one country to another. So they can say, well, I’m not buying this, I’m buying the next one. But what they forget is that many of us producers sign long-term contracts, and some of those long-term contracts are with customers who have loved and been loyal to us.
So when, for example, in Europe they say we want oil, we want gas, we say ok, first we have this long-term customer in Asia who has been paying for all these years, so you tell us to take that product . . So we ask them to sign the same long-term contract as other customers.
But what we want as a producer for a long time is for them to invest. This is what we keep saying when people say you need to immediately stop investing in fossil fuels. It affects our production. If you want stability in the economy, we need to reinvest in fuel.
I think for all of us OPEC members, the solution is peace. The solution is not war because we need stability. In all these issues, the only thing that is certain is volatility, and we don’t want volatility. We want stability, because fuel sustainability can be invested in, developed and grown through peace. It obviously affects us. Also because Russia was a major supplier of refined products such as diesel. So Russia being able to send its diesel affects everyone. Our main message is that peace is the solution. The sooner we can find a solution to this conflict, the better we can create this stability and continue to grow and create jobs.