“When founded, members of the organization had around 300 billion barrels of oil reserves and in the last 50 years, they have produced over 400 billion barrels,” Al-Naimi told a symposium marking the group’s 50th anniversary. “OPEC still has more than one trillion barrels, which places it in a unique position in terms of reserves to continue supplying petroleum to the world for several long years and to exploit these reserves for the benefit of future generations,” he added. Al-Naimi said Saudi Arabia was producing around 8.1 million barrels per day out of a total production capacity of 12.5 million bpd.
Al-Naimi emphasized Saudi Arabia’s leading role in the establishment of OPEC. “In 1951, Abdullah Al-Turaiki, then director of the Department of Petroleum and Minerals at the Finance Ministry, visited Venezuela, Iraq and Iran to discuss prospects of cooperation, which resulted in the formation of OPEC,” he said. “Considering the strategic nature of petroleum, the Kingdom had understood the importance of coordination between producers and exporters having large reserves, which could impact the market,” he said, adding that OPEC was successful in protecting the interests of member countries and achieving reasonable returns for investors in the industry.
Speaking at a separate session, Ibrahim Al-Muhanna, the oil minister’s senior adviser, said that OPEC’s history could be broken down into four phases, which had seen the transformation of the producers’ group from a price-fixing cartel to a more streamlined organization responding to oil market conditions.
“The 1990s saw the start of the fourth phase, which is likely to continue for several more years,” he said. The body today is more streamlined in its decision-making process and is able to adopt consensus decisions that are in line with market conditions and a long-term perspective, said Al-Muhanna. OPEC had also opened up to cooperation with other regional and international economic groups, on energy policy for the benefit of producers and consumers.
But Al-Muhanna, who has been involved in the Saudi energy sector for decades in various capacities, said he saw serious challenges ahead. “The fourth phase, which we are in now, is likely to continue into this decade and perhaps future decades,” he said. “At the same time, I believe the organization will face other challenges that are not directly linked to the oil market or the production of petroleum.”
Among these challenges are “the return of some major economic powers to protectionist trade policies, the possibility of a currency war and continued sharp volatility in the prices of basic commodities, including petroleum as well as the unrealistic link between petroleum and the environment,” he said.
“However, I believe that the organization will be able to cope with these developments and global changes so long as it continues to operate as an independent and realistic economic grouping whose aim is to defend the interests of its members as well as the international oil market and the industry as a whole now and in the future.”
