Five years on: the DoC moves from strength-to-strength
OPEC Bulletin Commentary – November 2021
It seems like just yesterday when ministers of OPEC and non-OPEC oil producing countries joined together with a shared vision in the face of a desperate market situation and signed the ‘Declaration of Cooperation’ (DoC). Five years have flown by since that fateful December 10 day in 2016.
This edition of the OPEC Bulletin will take a look back at all that has happened over the past five years regarding the DoC, because as famous leader Nelson Mandela said: “Remember to celebrate milestones as you prepare for the road ahead.”
The DoC was born from a landmark decision taken at the 170th (Extraordinary) Meeting of the OPEC Conference in Algiers, Algeria, on September 28, 2016, followed by decisions made in Vienna at the 171st Meeting of the OPEC Conference on November 30 and a December 10 meeting with 11 non-OPEC producers, when the DoC was signed. On that day, participating producers agreed on an unprecedented total downward production adjustment of 1.8 million barrels/day in order to bring balance back to the market.
As history attests, it worked like a charm, with the market quickly stabilizing and several years of positive world economic growth and prosperity ensuing.
Indeed, at this key juncture, as we look back on five years of the DOC, we see a long list of achievements and firsts from that time: the first production adjustment since Oran 2008; the first time participating non-OPEC countries committed to join OPEC in its efforts to re-establish stability in the market through voluntary adjustments to production; the first time a Joint OPEC-non-OPEC Ministerial Monitoring Committee (JMMC) had ever been created to monitor implementation of a joint decision, along with its supporting Joint Technical Committee (JTC); and the first time that a framework for sustained, structured and transparent cooperation between OPEC and non-OPEC nations has ever been established.
More milestones were to come. Following the largest-ever production adjustment of 1.8m b/d when the DoC was signed, participants adjusted production down nearly five times more to 9.7m b/d in April 2020 in reaction to the unprecedented demand destruction caused by COVID-19. It was the longest and deepest adjustment made in the history of the oil market or OPEC.
Faced with unparalleled market conditions following the pandemic, the DoC has once again proven to be an agile and effective tool.
Another milestone was reached in June 2019 with the signing of the more permanent ‘Charter of Cooperation’, which is meant to provide a platform for issues of common interest such as technology, climate change and the energy transition, to name a few.
The DoC was not initially intended to be a long-term solution, but rather to manage a critical market downturn. However, those involved in that first momentous meeting recognized its importance to the oil market and the world economy — importance that has only increased.
“We are happy to announce that a historic agreement was made here today,” said then President of the OPEC Conference and Qatar’s Minister of Energy and Industry, Dr Mohammed Bin Saleh Al-Sada, in a press conference after the first OPEC-non-OPEC Ministerial Meeting (ONOMM) in Vienna on December 10, 2016.
“The agreement has really stemmed from the sense of responsibility towards the rebalancing of the international oil market which will lead to positive results, not only for producers and exporters, but also for the consumers and to the health of the world economy, which we all require.”
Speaking for the non-OPEC side, Alexander Novak, then Minister of Energy of the Russian Federation, said: “This is truly a historic event and is the first time so many countries from different parts of the world producing oil have gathered together in one room to accomplish what we have done.
“And after today’s deal, I think it would be safe to say that as a result of this the relationship between OPEC and non-OPEC countries has reached a new peak and this creates a foundation for future medium- and long-term cooperation,” he maintained.
The words of these inspirational leaders of five years ago still ring true today.
As the DoC turned a new page in its evolution with the COVID-19 recovery, OPEC found itself at the centre of the energy dialogue. The pandemic has triggered talk of a ‘green recovery’, as world leaders look in earnest to tackling the issue of climate change. OPEC Member Countries fully support the goals of the Paris Agreements, to which all are signatory, along with the United Nations Framework Convention on Climate Change’s basic premise of equality and common-but-differentiated responsibility and respective capabilities.
With so much at stake for oil-producing, developing countries, DoC participants have more to discuss than ever before.
The efforts of DoC participating countries have benefited producers, consumers and the world economy at large. Additionally, OPEC’s reputation as a leader in the energy dialogue has been widely recognized and supported by energy stakeholders, world leaders and academia.
Thanks to the DoC, we are confident that we can meet and overcome any future challenges. The foundation created over the past five years through trust, fairness and cooperation will continue to flourish in the years to come.
