x Abu Dhabi, UAEThursday 27 July 2017

Opec ministers fail to reach consensus on new secretary-general

In sign of internal rivalries, ministers disagree on new secretary-general, a post sought by Saudi Arabia, Iran and resurgent oil power Iraq.

VIENNA // Opec ministers agreed to keep their daily crude production target unchanged at a meeting yesterday. But in a sign of internal rivalries, they failed to reach consensus on a new secretary-general, a post sought by Saudi Arabia, Iran and resurgent oil-power Iraq.

Libya's Abdullah Al Badry will remain secretary-general of 12-nation Organization of the Petroleum Producing Countries - the public face of the organisation between ministerial meetings and a symbol of the cohesion the group likes to project despite persistent internal rivalries. The meeting extended his tenure for a sixth year, making him one of the longest-serving officials in that post in Opec's history

"Everything will stay as it is," Saudi Arabian oil minister Ali Al Naimi said in Vienna. "We respond to customer demand. Whatever the customers want, we will give them."

"We have an experienced secretary-general in position, extending it one year is a very, very good decision," he said.

Saudi Arabia, Opec's top producer and de-facto decision maker, had nominated Majid El Muneef, a senior petroleum expert and a member of Opec's governing board, to be secretary-general. Arch-rival Iran had proposed its former oil minister Gholam Hossein Nozari, while Iraq had nominated its ex oil minister Thamir Ghadban.

Their failed candidacies reflected the divisions between Opec major member states, despite the cartel's outward show of unity.

A choice between Iran and the Saudis - whose disputes extend beyond oil dominance to regional political rivalries - would have further polarised the organisation. Iraq, which is vying to outproduce the Saudis in the next decade, also was considered by some members to have its own agenda instead of wanting to serve Opec.

The agreement to leave the production ceiling at 30 million barrels a day was expected. Actual output, however, is a million barrels higher because some countries produce above their limits.

Opec is expected to continue breaching the ceiling, despite a plentiful world supply of oil. Robust US production and anaemic world demand due to flagging economic growth have added to the mix, resulting in unusually high crude inventories.

Opec predicts even less demand for its oil next year in part because of consuming countries' weak economies - a concern the organisation addressed in a post-meeting statement as the "biggest challenge facing global oil markets in 2013".

Yet prices remain relatively high. The average cost of the group's oil basket - a mix of grades produced by Opec countries - has been above US$100 (Dh367) a barrel for the last two years, a first in Opec's history. Brent crude, which is used to price international varieties of oil, has also been well over $100 a barrel for this year and was trading at $109.63 yesterday, up $1.62 on the day.

Such levels cover production costs for most Opec countries with room for profits, leaving Opec ministers comfortable with the present output arrangement.

Opec announced its decision to leave the output ceiling unchanged in a statement.

"We are seeing some challenges for 2013, like the US fiscal cliff and the debt crisis in Europe," Mr Al Badry said in a press conference after yesterday's decision. "But we see some light at the end of the tunnel by the end of 2013, with China growth and a solution of the fiscal cliff situation in the US."

The producer group, founded in 1960, comprises Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the UAE and Venezuela. Opec will meet next on May 31 in the Austrian capital.

* Associated Press and Bloomberg