Addressing an audience of senior oil industry executives at the annual IP Lunche ...

Addressing an audience of senior oil industry executives at the annual IP Luncheon at the Dorchester Hotel on 20 February 2001, Dr Ali Rodriguez-Araque, the recently-appointed Secretary General of Opec, outlined the cartel’s role in bringing stability to a very erratic oil market. Integration was a key theme of Rodriguez-Araque’s speech - not only had multinational enterprises ‘gone through a process of transformation, changed their organisational structures, and entered more coalitions with ex-rivals to maintain their competitive edge, but, in order to survive, Opec, too, had become ‘more united, better organised, and, particularly significant, more transparent.’ He stated that ‘despite the many hurdles, Opec has managed to stand tall, and to claim a place on the global financial and political stage.’ He reflected briefly on the status of the oil market. He said that, as a result of the oil price crash of 1998 and early 1999, ‘Opec members, for one, lost in the process an estimated $56bn in petroleum export revenues.’ Oil companies were also hard hit - ‘As their income also slumped, thousands of workers lost their jobs, and the lack of cash meant that the oil industry was starved of major investments.’ However, the production cuts implemented by Opec and several major non-Opec producing countries brought about ‘equilibrium to the market’ and after a third round of cuts in March 1999, ‘prices started to rebound. ‘We believe that astute management of the market, and the ability to anticipate future trends in the energy sector, are essential to the health of the oil industry. It is in those areas that we believe the Organisation’s [Opec] efforts deserve to be applauded,’ commented Rodriguez-Araque. He went on to caution the audience that ‘the dangers to the world economy from underpriced oil are much greater than those from prices which are perceived to be too high. One danger is that low crude prices can lead to serious under-investment in the oil industry, and even to possible threats to the stability of the international monetary system.’ ‘It is through the coordination of petroleum policies and continued dialogue between producers and consumers that we can help to prevent repeats of past oil market calamities and economic disasters,’ stated Rodriguez-Araque. ‘Cooperation, not confrontation is the best policy for the attainment of the security of energy supplies, and for making our world a better place.’ The full text of Dr Rodriguez-Araque’s speech to the IP Luncheon is to be found on the IP website www.petroleum.co.uk) under www.petroleum.co.uk/ip2001/ip_speech1.htm

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