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Barkindo, new OPEC secretary general

OPEC elects former NNPC GMD, Barkindo as new Sec. Gen; fails to agree output policy

Barkindo, new OPEC secretary general
Barkindo, new OPEC secretary general
Despite failing to agree on output policy, with Iran insisting on the right to raise production steeply, the Organization of Petroleum Exporting Countries members rose from their Thursday meeting with a rare compromise to unanimously appoint Nigeria’s Dr. Mohammed Sanusi Barkindo as its new Secretary-General after years of friction over the issue.
Barkindo, was one-time Group Managing Director of the Nigerian National Petroleum Corporation (NNPC).
Fallout of the meeting was also the Saudi Arabia promised not to flood the oil market with extra barrels.
Tensions between the Sunni-led kingdom and the Shi’ite Islamic Republic have been the highlights of several previous OPEC meetings, including in December 2015 when the group failed to agree on a formal output target for the first time in years.
Tensions, however, were less acute on Thursday as Saudi Arabia’s new energy minister, Khalid al-Falih, showed Riyadh wanted to be more conciliatory and his Iranian peer Bijan Zanganeh kept his criticism of Riyadh to an unusual minimum.
Saudi Arabia and its Gulf allies had tried to propose OPEC set a new collective ceiling in an attempt to repair the group’s waning importance. But Thursday’s meeting ended with no new policy or ceiling amid resistance from Iran.
Despite the setback, Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC’s largest producer, already pumping near record highs, to raise production further to punish rivals and gain additional market share.
“We will be very gentle in our approach and make sure we don’t shock the market in any way,” Falih told reporters.
“There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” Falih said when asked whether Saudi Arabia could accelerate production.
The market has grown increasingly used to OPEC clashes over the past two years as political foes Riyadh and Tehran fight proxy wars in Syria and Yemen.
Saudi Arabia effectively scuppered plans for a global production freeze – aimed at stabilizing oil markets – in April in the Qatari capital of Doha. It said then that it would join the deal, which would also have involved non-OPEC Russia, only if Iran agreed to freeze output.
Tehran argues it should be allowed to raise production to levels seen before the imposition of now-ended Western sanctions over Iran’s nuclear program.
Zanganeh said Tehran would not support any new collective output ceiling and wanted the debate to focus on individual-country production quotas, effectively abandoned by OPEC years ago.
“Without country quotas, OPEC cannot control anything,” Zanganeh told reporters. He insisted Tehran deserved a quota – based on historic output levels – of 14.5 percent of OPEC’s overall production.
OPEC is pumping 32.5 million barrels per day (bpd), which would give Iran a quota of 4.7 million bpd – well above its current output of 3.8 million, according to Tehran’s estimates, and 3.5 million, based on market estimates.
At its previous meeting in December 2015, OPEC effectively allowed its 13 members to pump at will.
As a result, prices crashed to $27 per barrel in January, their lowest in over a decade, but have since recovered to around $50 due to global supply outages. On Thursday, Brent prices eased 1.5 percent to $49 per barrel.
Barkindo, appointed GMD of NNPC by President Umaru Yar’Adua on January 12, 2009, has previously been an acting Secretary General of OPEC.

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