Barkindo: "The worst is over"

Barkindo: "The worst is over"

Elisa Maria Giannetto
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OPEC's secretary general expressed optimism during a visit to Nigeria, as offshore exploratory operations resume in Mozambique

"We remain optimistic that the worst is over for this cycle." That is how OPEC Secretary General Mohammed Barkindo described the market outlook to the press at a meeting with Nigerian minister of state for petroleum Ibe Kachikwu in Abuja. Barkindo praised Nigeria’s resilience in the face of an oil price crash that saw prices drop 80% between autumn of 2014 and January 2016. Calling the period "the worst energy cycle in recent memory," he said, "I have visited all other countries, and I have seen how they are struggling. But you have weathered the storm. I think the worst is behind us, thanks to your leadership..." As its main proponent, Barkindo was also quick to talk up the deal signed by OPEC and non-OPEC oil producers in December, the target of which, at least for the first year, is to improve prices and reduce excess reserves. The question mark now is how oil prices will do in the medium-term. For OPEC and for Gulf states like the United Arab Emirates, Kuwait and Qatar in particular, $60 a barrel would suffice to stimulate new investments without threatening to trigger a rapid expansion of shale oil production in the USA. Abu Dhabi, Riyadh and their Gulf allies hope this slight rise over the current levels averaging around $56 a barrel will encourage investments and resolve the oversupply problem. Meanwhile, some operators are resuming exploratory activities in Mozambique. The South African petrochemical group Sasol has reported promising results from offshore oil & gas exploration. The company’s CEO Stephen Cornell told reporters that four of the twelve wells planned off the coast of Mozambique have already been drilled, all with surprising results. The east African country has vast untapped natural gas deposits, and these most recent discoveries are positioning it as a key supplier for natural gas in the future. Ecofin Agency projects that Mozambique could start producing and exporting hydrocarbons by 2022 or 2023.