Dmitry Medvedev meets with OPEC Secretary General Mohammad Sanusi Barkindo

Excerpts from the transcript:

Meeting with OPEC Secretary General Mohammad Sanusi Barkindo

Dmitry Medvedev: In the last few years we have intensified the Russian Federation’s contacts with OPEC considerably.

Coordinated policy in the oil market affects the conditions taking shape for OPEC, other states and even the world economy in general. Many price quotations at stock exchanges, contracts that are signed and even currency exchange rates depend on meetings that take place in OPEC and consultations between OPEC countries and other states and the organisation.

We are pleased with the development of our cooperation and the decisions that were made recently on the basis of coordinated policy. This benefits all countries and allows them to find the required balance in the oil market.

I would like to thank you for your participation in the St Petersburg International Economic Forum. The presence of the OPEC Secretary General at this forum will benefit it.

Mohammad Sanusi Barkindo (via interpreter)Our relations with the Russian Federation entered a new stage last year when I assumed the position of Secretary General.

Your minister, Alexander Novak, was the first minister I contacted. I received valuable support from Mr Novak in a very difficult situation last year.

When I assumed this position, OPEC had problems both internally and in cooperation with non-OPEC members. This was the most difficult stage in the past 40 years, but owing to the political will of the Russian Federation and thanks to Mr Novak we managed to unite within OPEC and later on build a bridge between OPEC members and non-OPEC countries.

Last year OPEC managed to make a historic decision on oil production for the first time in almost eight years. We also involved 10 non-OPEC countries and achieved unity among 24 states. For the first time ever we managed to unite the 24 oil producers both from OPEC and outside it, and this was a historic achievement. It would have been impossible without the will of the Russian Federation and the support we received.

Briefing by Alexander Novak and Mohammad Sanusi Barkindo following the meeting

Alexander Novak: We are cooperating with OPEC very actively now. This is tied to our joint actions with OPEC countries to stabilise the situation in the markets. The OPEC Secretariat, the organisation itself and Mr Barkindo personally are playing a key role in this respect.

The second format in which we cooperate is the energy dialogue between Russia and the OPEC Secretariat. We resumed this format in 2012. It allows us to share experience and information, conduct joint research, assess the current environment and make oil market forecasts for the future.

We are conducting joint studies in various areas, for instance, on shale oil and its impact on world markets, research in the development of oil processing, the growth of renewable energy sources and their impact on the future of oil.

After the agreement on the current deal, when it expires and the market is balanced out, we will certainly continue cooperating with OPEC.

Question: There was mention of institutionalising the framework. Will there be any body, perhaps, a committee, created to that effect?

Alexander Novak: It’s a work in progress. This platform will allow OPEC and non-OPEC members to consolidate. It could continue its work following the termination of the agreement on cutting production. Perhaps it will be a ministerial meeting that will be held once or twice a year in a broader format, including OPEC and non-OPEC members. We have such proposals being drafted. At the next meeting of the monitoring committee, we will hear these proposals in order to discuss them during a ministerial meeting to be held in November.

Question: Mr Barkindo, does that mean that we could see countries that aren’t taking part in the deal taking part in dialogue with the OPEC and non-OPEC countries? Will this ongoing exchange of opinions include countries that aren’t cutting production currently?

Mohammed Sanusi Barkindo: Yes, the 24 countries that are currently bound by the Declaration of Cooperation, the main committed to implementation of what was agreed. You can see that so far so good in terms of the implementation process. We have put in place new structures during the ministerial monitoring committee that is assisted by the Joint Technical Committee that meets monthly, then the JMC bimonthly. The reports of the JMC and the JTC have all confirmed the high level of conformity of participating countries. That almost shocked the market. Currently we have over 100 percent on level of conformity. As Minister Alexander Novak just said, the cooperation and collaboration between us, OPEC and non-OPEC, will outlive the implementation process. Beyond the rebalancing of the market, we are currently looking at a framework that we will institutionalise this partnership between OPEC and non-OPEC on a sustainable basis.

Question: So as it sounds, if the deal ends in March, would you expect  the Joint Monitoring Committee and Technical Committee to carry on providing reports or that elements of the cooperation cease with the deal?

Mohammed Sanusi Barkindo: This is work in progress, we have discussed that at the meetings of the conference of OPEC, and the OPEC – non-OPEC Ministerial Conference on the 25th. The Secretariat is working with various committees: the Economic Commission Board, the Board of Governors, the JTC and the OPEC – non-OPEC Technical Committee in designing an effective framework that would ensure that this cooperation and collaboration continue on a sustainable basis, because we believe that this cooperation is in the best interests of not only producers, but also consumers, and by extension the global economy. For us, we are putting in place, if you like, the building blocks for a Catholic marriage. We do not expect a divorce in this marriage. And we have just got the blessing of His Excellency Prime Minister Medvedev who supports what we have done so far and also urges us to work towards achieving this long-lasting relationship.

Question: Dr Barkindo, did you two actually discuss… the question of Russia joining OPEC?

Mohammed Sanusi Barkindo: We are very pleased with the level and the quality of cooperation that exists between us and the Russian Federation. As you just heard from Mr Novak, today we had the 6th high-level meeting of the OPEC and Russia Energy Dialogue that had started long time ago, maybe 11-12 years ago, but became moribund and then thanks to his coming into office he was able to revive this dialogue, and he has been consistently not only participating, but leading the dialogue since he came in 2012; and today we had a very productive day, the six, and we have agreed on some further follow-up of technical meetings with Russia. Under his able leadership, I think, OPEC and Russia have entered a new chapter of beneficial relations. And this is not only in the interests of OPEC and Russia. But thanks to him, we are able to get ten more non-OPEC countries to join us in this declaration of cooperation. So the role that he has been playing is in the interests of all. But the decision to join OPEC is a sovereign decision; I am not qualified to discuss or answer your question.

Question: You said that Russian oil companies work in conjunction with Saudi companies on joint projects in Iran.

Alexander Novak: An agreement was signed between the ministries of the Russian Federation and Saudi Arabia on promoting cooperation in the sphere of energy. We have created a working group, which includes representatives of the ministries and the companies, and they regularly meet in order to identify points of growth and areas of cooperation. We have identified about 30 such areas. This includes, in particular, participating in development projects and prospecting and exploration, implementing projects for promoting the petrochemical industry and renewable energy sources, as well as liquefied natural gas production processes. We are also discussing the operations of the Russian company  Nefteservis in Saudi Arabia, and Saudi Arabian companies in Russia. Saudi Minister of Energy, Mr Al-Falih, who met with senior executives of our companies, visited Moscow. We will be able to name specific projects in these areas after the companies work through all the issues related to these projects.

Question: Has the date of the next monitoring been set yet?

Alexander Novak: Mr Barkindo and I discussed today the possibility of holding this monitoring on 22-24 July. I think we will be able to agree on this with all participants of the Monitoring committee.

Question: Will international companies join this deal, not just countries, but oil companies?

Mohammed Sanusi Barkindo: In the medium to long term, depending on the framework of cooperation and collaboration that we are working on, we cannot rule out any option. At the moment we are looking at all scenarios in designing that framework. So it may be premature of me to say what form and nature the framework will have.