The Organization of Petroleum Exporting Countries will welcome Iran’s return to the oil market when the US sanctions are removed, the secretary-general of OPEC said.
“The National Iranian Oil Company has the capacity to bring on substantial production volumes within a short period of time,” Haitham al-Ghais, who is visiting Tehran for the first time, said in an exclusive interview with the Oil Ministry’s news portal Shana on Tuesday.
"We believe that Iran is a responsible player among OPEC members. I am positive there will be effective collaboration to ensure that the market will remain balanced as OPEC has continued to do over the past many years.”
Al-Ghais praised Iran as a founder member of OPEC that has always had fruitful, effective and constructive cooperation with other members.
The Kuwaiti oil executive noted that Iran has always contributed to closer unity of the OPEC members, both at the ministerial and technical level.
Expounding on the latest situation in the oil market, al-Ghais expressed hope that consensus among the OPEC member states as well as Iran’s constructive support and cooperation would help restore calm to the global oil market.
The OPEC chief noted that Iran’s Oil Minister Javad Owji informed him about Iran’s investment in upstream and downstream sectors.
Voluntary Production Cut
Asked about OPEC’s voluntary production cut and its effect on oil prices, al-Ghais said, "In OPEC, we do not target a certain price level. All our actions, all our decisions are made in order to have a good balance between global oil demand and global oil supply."
According to the OPEC secretary-general, global energy demand is projected to rise by 23% by 2045 that should be met by fossil fuels, such as oil.
OPEC’s current output (100 million barrels per day) must increase by 13 million barrels per day by 2045, for which massive investment is needed. Its estimates show that to hit the production target of 2045, close to $2.1 trillion are required in investment, of which $10 trillion should be allocated to explorations.
“Before the market downturn of 2015-16 and the Covid-19 pandemic, annual investments were in the range of $500-600 billion. Now, we are talking of levels that are around $300-400 billion. It has improved slightly, but still not significant enough.”
What OPEC tries to do is to create the right atmosphere, the right marketing environment with market stability and fewer fluctuations.
OPEC tries to improve the balance between supply and demand, and when this stability is achieved, this will attract and incentivize national oil companies, international oil companies to cooperate and invest more in this key industry.
Independent Organization
Commenting on speculation that OPEC has lost its status to keep functioning as an effective independent organization, he noted that this is not a fair assessment.
“I believe OPEC, since 1960, has been playing a dominant role in stabilizing the global oil market. OPEC has managed to bring onboard with it 10 countries in the Declaration of Cooperation, in order to restore market stability and balance. The organization has been a steady player despite all the volatilities and all the challenges of over 60 years, since it was created. Turbulence in history has never prevented OPEC from being a significant player on the global energy scene.”
He noted that OPEC believes in international cooperation and dialogue not only with producers, but also with many of the key consumers around the world, such as the European Union, China and India.
“We are working on developing more with key consumers around the world, such as Japan, South Korea and others. So, OPEC is all about dialogue. Collaboration is the way to go forward whether it is in energy or other fields,” he added.
Zero-Carbon Policy
Asked about oil producers’ responsibility to adopt zero-carbon policy, the OPEC chief said oil is not the only cause of pollution.
“There are many other sources of contamination including the battery waste. There is the agriculture industry; there is the coal industry and many other industries that cause pollution.”
According to al-Ghais, member countries and national companies are also investing in renewables, hydrogen projects, circular carbon economy projects and in planting trees, like the Saudi or Middle East Green Initiative that helps limit emissions and reduces carbon footprint of Mideast countries and industries.
“That misconception, if I may put it, is something that we are working on to make clear to everybody around the world the role that OPEC member countries are playing to reduce the carbon footprint and emissions from the oil industry,” he said.
In early April, Saudi Arabia and other members of OPEC+, which include OPEC countries and allies, including Russia, announced further oil output cuts of around 1.2 million barrels per day, bringing the total volume of cuts by OPEC+ to 3.66 million barrels per day.
Saudi Arabia, the kingpin of OPEC, and Iran announced in March that they would restore diplomatic relations after years of hostility, in a deal brokered by China, the world's No. 2 oil consumer.
