The OPEC chief talks about production cuts, price volatility and Russia’s war in Ukraine and its effect on oil prices.
Ministers from the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, will meet virtually on February 1. The meeting comes at a time when the price of oil has risen towards 90 dollars per barrel. Al Jazeera’s Fidelis Mbah from Abuja, Nigeria spoke to OPEC President Gabriel Mbag Obiang Lima — who is also Equatorial Guinea’s hydrocarbons minister — about the problems facing the organization. The work has been edited for clarity.
FM: Are you taking any steps to increase production or will you stick to the recently announced targeted production cut?
Lima: I think the approach we have from organizations is “watch and see” and why I’m going to say it’s “watch and watch” is because there’s so much uncertainty that’s happening in the market, it’s all changing by the week, by the month, by the day and what we do is to follow what is happening in the market. I will give you the best example. The opening of China. Another example is the conflict between Russia and Ukraine. So really, these are all factors that we put together and when we do that, then we assess what we need to do.
We want to remind you, one thing that OPEC does not control is the price. What OPEC does is ensure the stability of supply and demand. Therefore, it is very important that we watch and monitor and make sure that the consumer … always gets the product. So at this point to say that the quota is going to go up or down, it’s really irresponsible to do that. Let’s first have the data, to see what will happen through the new opening of China, to see our future expectations of the product and then from there as a block we can make a decision.
FM: So does this mean that the issue of oil production policy will be discussed during the OPEC Joint Ministerial Monitoring Committee meeting on February 1st?
Lima: What I’m saying isn’t that it won’t show up. There are many factors we need to consider, including key OPEC members like Venezuela, Iran and Libya who have a lot [challenges] with production, you know that one day they are producing and the next day they have a problem. So before that meeting we have an internal meeting where we evaluate such things.
As it stands right now, the world needs oil to continue to develop, to continue to grow, so we need to make sure that we can maintain the supply. And it’s not just OPEC members. These are non-OPEC members and others. We will monitor what is happening, we will have a meeting before the meeting in February and for that meeting in February we will make a decision on what to do. But at the moment there seems to be more demand for this product than ever. Clearly, we have to make sure that we continue to supply the market. This product is much more necessary for economic recovery than it is limiting it.
FM: So why is the United States accusing OPEC of cutting production in favor of Russia?
Lima: OPEC is not a political organization. Second, OPEC is not arguing with anyone. What OPEC does is collect information about the producer and we collect information about the consumers and then OPEC makes a logical decision. It’s not political. It is not favoring one country or another. So, when people say that we favor one and the other, it’s really irresponsible. That’s not true, and it’s clear that at the same time we care about consumers because you have to remember that the one thing that everyone wants is a stable product.
When you have product stability, you can manage a better economy. We want stability. If you have stability at $20, $80, $100, that’s what you want for the long term because that’s what you can manage. So any question about OPEC being against this or that is really more speculation. You have to remember one thing, speculators are traders. That’s actually the key for whoever wants to make all that price volatility. OPEC does not want volatility. OPEC is there to evaluate the data and whatever the data tells us, then we will act.
FM: How did the war between Russia and Ukraine affect the energy sector and the impact on the world economy?
Lima: I am the president of OPEC, but also the president of the Gas Exporting Countries Forum (GECF), so this is oil and gas and clearly. We made our impact in gas, but now also in oil. The problem is that some people think it is very easy to switch production from one country to another. so I can say OK, I don’t buy from this one, I buy from 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 clients we’ve loved and loyal to us.
So, when, for example, in Europe they say we want oil, we want gas, we say OK, first we have a long-term client in Asia who has been paying all these years, so you tell us to take that product. Therefore, we ask them to sign the same long-term contract as other clients.
But what we as a producer have long wanted is for them to invest. That’s what we keep saying when people say you should stop investing in fossil fuels immediately. This has an impact on our production. If we want to have stability in the economy, we have to invest back in fuels.
I think that for all of us OPEC members, the solution is peace. The solution is not war because we need to create stability. In all these issues, the only thing that is clear is volatility, and we don’t want volatility. We want stability because you can invest in fuel stability through peace, you can develop and you can grow. It clearly affects us. Also because Russia was a major supplier of refined products like diesel. So Russia not being able to send their diesel affects everyone. Our key 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 new jobs.