-By Sopuruchi Onwuka
It would prove difficult to find a Nigerian who has flown the most populous black nation’s national flag in the international arena as high, in the recent years, as the current Secretary General of the Organisation of Petroleum and Exporting Countries (OPEC), Dr. Mohammad Sanusi Barkindo, is currently doing at the OPEC where he has successfully led a dedicated team of technocrats in deploying effective countermeasures against very strong pool on oil prices impinging from weak demand.
People that are familiar with him understand clearly that the streaks of strategic measures deployed by OPEC in galvanising global coalitions for petroleum market rebalancing and buoying investment reward in the industry succinctly depict the traditional policy signature of Barkindo.
Indeed, the global petroleum industry is grateful to OPEC for successful rebalancing of demand and supply forces in the oil market, the outcomes of which are shaping a new commercial outlook for investments, and also restoring positive economic outlook for producing countries.
The threat of low prices came from the twin market headwinds – firstly, from oversupply of 2016, and secondly, the subsequent demand collapse of 2020 associated with global lockdown measures against the coronavirus pandemic. Both circumstances had oil production and supply surging well ahead of weakening demand, creating a turgid market with waning value for its commodity.
At the centre of the efforts, strategies and diplomacy of weathering the low price crisis that hit the market are Barkindo and his team of OPEC stalwarts who endeavored to arrest overproduction, and allowed bulging stocks to drain down.
In delivering on the feat, Barkindo surprised the world with advanced economic diplomacy, bridging age-long ideological gaps, and forging new relationships across previously perceived enemy lines. He simply rewrote the art of diplomacy by dismantling obstacles to cooperation and building the bridges of collaboration among producers.
Today, under the facilitation of the OPEC secretariat, former trade and economic adversaries sit on the same table to discuss world’s energy future. OPEC has successfully presented the world a new prism that makes it clearer that energy transition is not necessarily a threat to petroleum industry, but a demand adjustment that would accommodate all forms and sources in the future energy mix.
Exuding calmness, confidence and power, Barkindo has smoothly traversed world’s most contentious political terrains, and won hearts of avowed opponents of OPEC, with the message of cooperation in stabilising the global oil market. He successfully connected officials from Russia, Iran, United States and Saudi Arabia in talks to share views on the future of the market. He optimised all existing sovereign supports, and explored fresh diplomatic channels to recapture the value of oil in the international marketplace.
Barkindo has not only displayed effectiveness in leading OPEC’s efforts at draining glut from the market, his team also literally saved economies, corporations, institutions and the petroleum industry from the brinks of commercial and economic disaster.
It would seem that the battle to secure the future of the petroleum industry secured celestial approval for the emergence of Barkindo into the role of OPEC Secretary General in 2016 when the first price burst hit the global oil market. Prices had mounted the slope after nearly a decade of boom when prices broke the OPEC price band of $18-$22 per barrel, and surged to the summit of $148 per barrel in 2008.
With price bulls ruling the oil market, industrialised economies that patronise the energy market grumbled bitterly against the role of OPEC in driving up oil prices – a situation that created severe diplomatic chasm between multilateral economic blocs represented mainly by OPEC and the Organisation of Economic Cooperation and Development (OECD). The strong polarisation of camps between energy producers and consumers had cast OPEC in the image of a cost-driving cartel that posed threats to free trade and venture viability.
Whereas the strong oil prices had yielded rewards for investors, and channeled bountiful revenues to governments of producing nations, they also sparked off quota indiscipline in OPEC, as members joined the race with non-member producers in the scramble to capture the revenue opportunities of the moment.
Again, the high price cycle also provided the highly awaited commercial viability threshold for exploitation of dormant but huge unconventional petroleum plays in shale and tar sand formations across the world. Funding flowed in from available sources to finance all petroleum operations.
However, surging production from the unconventional plays further complicated oversupply in the market from numerous new sources.
Unfortunately, the price boom cycle, amid accelerated production, left global investors, operating companies, finance institutions and producing countries unprepared for a sudden burst.
While OPEC restrained members, non-member producers led by Russia and the United States unleashed full production capacity – a provocation that sparked production spar which watered down prices, and plunged producing countries into economic gloom.
Credible market data had shown that prices inclined against oil between 2014 and 2016 when global market became satiated with supply glut. Within the period, oil supply growth rate of 5.8 million barrels per day was already 1.5mbpd higher than demand growth rate of 4.3mbpd. Buyers had cashed in on the opportunity to mop up cheap oil for storage. And by July 2016, OECD commercial stock overhang reached unprecedented 403 million barrels over the five-year average.
The consequent market imbalance maintained strong pull on prices, wiping off profits from investors’ books, draining government revenues, stalling exploration and production investments, and forcing operating firms to shrink down and shed staff. Estimated investment deficits in the petroleum industry amounted to over $300 billion or N144 trillion. Revenue deficit suffered by OPEC members also reached $1.0 trillion or N480 trillion.
With prices plunging below break-even levels, billions of dollars of investments in unconventional petroleum play encountered viability risks, exposing lenders to uncertainty, while throwing thousands of employees out of job.
Consequently, mostly oil dependent OPEC members suffered acute budget dysfunctions, as expected revenues for development programmes dried up. Countries with lean or no stabilisation funds like Nigeria plunged straight into recession.
Pundits concluded that OPEC had completely lost control of the market.
It was at this critical period in the role of OPEC as market supply moderator that Barkindo emerged Secretary General of OPEC. But he came prepared, with the dexterity of a seasoned technocrat, mobilising every diplomatic instrument at OPEC’s disposal in building bridges across vehemently polarised ideological and economic blocs.
With a background of rich and complex career paths that traversed separate and several disciplines and roles, Barkindo arrived OPEC secretariat with burning instinct to catalyse his bundle of accumulated experiences and skills in bonding together OPEC members into group solidarity, and restoring quota discipline. He led a team of bureaucrats in a desperate bid to arrest falling prices and restore value on the commodity which sustains emerging economies and powers industrialised countries.
From Africa to Middle East and South America, Barkindo sold the message of stronger, more united and solidly bonded OPEC. With refined diplomatic glitz, he dismantled political and religious barriers, and accentuated the urgency of collaboration across producers in salvaging the world’s petroleum industry from self-destruction.
In building bridges across divides, Barkindo employed finesse and logic, displacing the culture of blame with the art of lavish appreciation of roles, and also poured approbation on positive responses. He quickly greased out friction in relationships between OPEC and key OECD states, and canvassed alliances across economic interests to guarantee global energy security.
For the first time in history, OPEC worked even with the United States – not in cutting production, but in amplifying the role of petroleum industry in the economic health of world’s biggest economies. OPEC’s new relationship with the United States reshaped global perception of OPEC – no longer as market upsetting cartel, but as industry commerciality mainstay.
The cumulative rewards for Barkindo’s untiring bridge building efforts are stronger unity among members, enlarged cooperation with non-member producers, and enhanced understanding with consuming nations. These led to achievements of the Declaration of Cooperation (DoC) in 2016 between OPEC and 10 country coalition members in taming supplies and rebalancing the market.
The DoC, which came into effect in January 2017, committed Azerbaijan, the Kingdom of Bahrain, Brunei Darussalam, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, the Sultanate of Oman, the Russian Federation, the Republic of Sudan, and the Republic of South Sudan to combined initial output cut of 558,000 barrels per day. The cut supported OPEC’s 1.2mbpd output reduction, and also showed solidarity and their commitment to a stable and balanced oil market.
The DoC also earned OPEC the membership of Equatorial Guinea within the period.
“It is ingrained in our DNA to take actions towards a collective good, in the interests of producers, consumers and the global economy,” Barkindo said.
Barkindo and his team worked tirelessly to facilitate the meetings, and set the right agenda that provided pathway for the sovereign representatives to reach cooperation accords.
“For the first time ever, OPEC coordinated with 10 non-OPEC oil producing countries, led by the Russian federation, in a concerted effort to accelerate the stabilisation of the global oil market,” he said.
As it finally proved, the DoC proved handy in late 2019 when the global coronavirus disease inflicted the biggest demand destruction on the oil market, beginning from China which was one of the biggest importers of petroleum commodity.
Concerted global social and economic lockdown in failed attempts to arrest and contain the spread of the disease impacted global oil demand, wiping off demand volumes amounting to 22mbpd as industrial activities and transportation were grounded.
The impact on oil prices was so devastating that the West Texas Intermediate (WTI) crude grade went negative for the first time in history, with prices plummeting to – $37 per barrel as stock rose above storage limits. Sellers had to pay buyers to lift their crude, and relieve them of the cost of holding crude cargoes in freight tankers.
Again, the dire situation in the market challenged Barkindo and his team to commit participating nations in the DoC to deeper cuts.
“In response to this unprecedented situation, OPEC knew it had to act. Thankfully, we did not need to reinvent the wheel. We turned to the mechanism that had helped us emerge out of the 2015-2016 oil market downturns: the ‘DoC’.
“Participating countries have taken proactive and preemptive action to help reduce volatility, stabilise the oil market, and provide a flexible platform for recovery with potentially broader participation in the coming years.
“This was evidently on display at the 9th and 10th (Extraordinary) Meetings of the OPEC and non-OPEC Ministerial Meetings on 9 and 12 April 2020, respectively. At these seminal meetings, it was agreed to adjust downwards overall crude oil production by 9.7 mbpd, starting in May and June 2020.
“This is the largest ever production adjustment by DoC participants, the largest in the history of OPEC, and the largest in the history of the oil industry. These industry-saving measures were commended by a broad range of stakeholders, including the G20, under the Presidency of the Kingdom of Saudi Arabia.
“The non-OPEC countries that have worked so closely with us over the last almost five years, have been remarkable exemplars of the three best principles of international cooperation: respectfulness, responsibility and commitment to carefully choosing the most appropriate course of action.
“DoC Participating Countries have taken proactive and pre-emptive actions to help reduce volatility, stabilise the oil market and provide a flexible platform for recovery with potentially broader participation in the coming years,” Barkindo maintained.
But rising to the challenge of rescuing the market at a period of demand destruction and pandemic lockdowns comes with personal and group sacrifices which Barkindo and his team of bureaucrats at OPEC were willing to make. In total, the secretariat held the ministerial meetings nine times in 2020 and has continued organising more in 2021 despite impeding covid-19 risks.
“The team at the Secretariat never cease in their relentless dedication, commitment to duty and achieving the highest standards in service excellence,” Barkindo said.
The success of OPEC at bringing over 24 countries into cooperation has also proved to be a credible strategy in casting it in a new image of global deal maker and economic stabilisation factor. OPEC is today a friend of the United States, China and Iran – the visible common platform that bridges ancient ideological gaps.
The group whose activities are coordinated by Barkindo’s team has also achieved trust and unity among its folds in the DoC, leading to high quota discipline and commitment towards common economic objectives and targets. OPEC reported cumulative quota compliance of 114 per cent in April 2021.
Market response to the measures has also been impressive. With supply now suppressed below demand rate, stock build up has begun to decrease and provide the needed push for prices. OPEC reported that OECD commercial oil stock inventories in April was 160 million barrels lower than the same time one year ago, and 34 million barrels above the 2015-2019 average.
“We expect to see further draws in the months ahead,” Barkindo had stated in a paper.
With rising momentum for global economic growth recovery and prospects of greater oil demand, OPEC and allies plan to release more crude oil volumes to keep the market well supplied.
What has become abundantly clear is that OPEC has achieved critical alliance with key nonmember producers to gain a greater and firmer control of the market, and this was accomplished without any political, diplomatic or trade rancor. And prices have responded by rising from the depths of -$37 per barrel in April 2020 to $72 per barrel in May 2021.
Market reports showed that the OPEC Reference Basket (ORB) value rose firmly in May, increasing by $3.67, or 5.8 per cent m-o-m, to stand at $66.91/b, its highest monthly average since May 2019. Compared to the previous year, the ORB was up 56.8 per cent, from $39.65/b in 2020 to an average of $62.16/b so far this year.
Thus, the prime goal of rebalancing the market has been sufficiently achieved through the group’s traditional supply control measures. And the strategy of market control has improved to enable OPEC maintain sustainable market balance.
“Over the last twenty months, OPEC has upgraded its ‘volatility fighting’ toolkit. Our monthly meetings and partnership with non-OPEC producing countries under the DoC have enabled us to improve both the nimbleness and comprehensiveness of our responses to oil market instability,” Barkindo declared.
Barkindo also coordinates the Economic Commission Board (ECB) of OPEC: the economic and technical think-tank of the organisation for thorough and detailed analyses of market conditions and emerging trends.
The 135th meeting of the ECB which held virtually in June had a review of the global oil market and the world, and addressed key issues of investment, recovery expectations and prospects of crude production.
The meetings chaired by Barkindo lay agenda for the Technical Meeting of OPEC and non-OPEC countries participating in the DoC, Meeting of the Joint Technical Committee (JTC), Meeting of the Joint Ministerial Monitoring Committee (JMMC), Meeting of the OPEC Conference, and the OPEC and non-OPEC Ministerial Meeting.
The ECB meetings amplified the role of Barkindo in piloting the decision, making process that produces the outcome of the several meetings of OPEC and its allies. The decisions at the meetings help in shaping the global oil market and determine the fate of the petroleum industry. Thus, Barkindo and his team at OPEC control the inner hub of strategic policy formulation processes and drive dialogues, share market insights and instigate actions that resolve industry issues.
It would be realised that while playing his role at OPEC, Barkindo flies the Nigerian flag and also shares concerns about home economy where petroleum industry accounts for about 90 per cent of the nation’s total foreign exchange revenues, nearly 95 per cent of total exports and balance of payment, some 20 per cent of the gross domestic product (GDP), and about 50 per cent of total funding support to government’s annual budgets.
Therefore, Barkindo’s dexterous discharge of his OPEC roles has directly and abundantly benefitted Nigeria in the form of the rising oil prices have helped the domestic economy emerge from two consecutive recessions since 2016. Improvement in oil prices helped the local economy achieve the second consecutive quarterly growth in May.
The rise in oil prices has also provided the basis for continued importation of investments in the domestic petroleum industry. Despite the gloomy outlook that came with price crash of 2020, Nigeria recorded key foreign investments in the petroleum industry. With the prevailing buoy in prices, foreign investment partners in the nation’s deepwater play have reached deal with government on resumption of development investments.
“Looking forward, Nigeria’s business sentiment remained optimistic, driven by the current expansion in manufacturing operations as well as the higher oil prices,” OPEC reported in its monthly report in May.
Barkindo’s role in the growth of the Nigerian economy actually started with contributions in establishing the country as an influential factor in the OPEC group where, for decades, he has been a familiar face behind the late Nigerian oil industry legend, Dr. Rilwanu Lukman.
In growing under the late Lukman as a devout disciple and inseparable loyalist, Barkindo had regularly maintained presence in the Nigerian delegation at OPEC, qualifying for strategic roles as he climbed the rungs of eminence. In no distant time, he started taking roles independently and asserting his capability for delivering on responsibilities.
Thus, Barkindo’s appointment as Secretary General in 2016 for the first three year tenure, and subsequent reappointment for a second tenure mark the zenith of longstanding presence and active roles in servicing the Nigerian nexus with OPEC.
Born on April 20, 1959 in Yola, Adamawa State, Barkindo acquired his education in Nigeria and abroad, earning the Bachelor of Science degree in Political Science from Ahmadu Bello University, Zaria, Kaduna State, in 1981. He also holds a Post Graduate Diploma in Petroleum Economics acquired from Oxford, United Kingdom in 1988, and a Master of Business Administration in Finance and Banking acquired in 1991 from Washington University, United States. He is a Fellow of George Mason University, Fairfax, United States between 2013 and 2016.
Barkindo also holds a Doctorate Degree in Science (Honoris Causa), Modibbo Adama, from Federal University of Technology, Yola.
Interestingly, all of Barkindo’s post graduate education was acquired in the line of career development – a key index of his unquenchable thirst for excellence. Accordingly, his growth has remained unstoppable.
Barkindo’s humble start in 1982 as employee of the Nigerian Mining Corporation, Jos, later saw him propelled to the positions of Special Assistant to the Minister of Mines, Power and Steel, Special Assistant to the Minister of Petroleum Resources and Head of Office of the Chairman of the NNPC Board, and Special Assistant to the Minister of Foreign Affairs.
He took a 24-year career at the Nigerian National Petroleum Corporation (NNPC) during which he held in various positions before attaining the position of Group Managing Director of the corporation in 2009.
For over 24 years between 1986 and 2010, Barkindo maintained a regular position as Nigerian Delegate to OPEC Ministerial Conferences, holding innumerable positions, and discharging various functions for and on behalf of OPEC.
He was the founder delegate to the formation of the African Petroleum Producers Association (APPA) in Algiers, Algeria, in 1986, and he remained a delegate to APPA Ministerial Conferences from 1987 to 2010.
With enormous exposures at local, regional and international petroleum and economic diplomacy, it is little wonder that Barkindo has indisputably become an accomplished technocrat and an international maestro with vast wealth of experience in negotiation and mediation.
With his rich pedigree in the art of subtlety, finesse, craft and intelligence, Barkindo stands out like a giant snail with soft powerful pedals, silently crushing hard shells to harness the seeds of hope. His mastery of the art of dialogues makes it easy for him to address difficult subjects with hearty banters.
Barkindo’s vast network of diplomats, his association with world’s most powerful political leaders, his mingling with very influential industry captains, and his blend with environmental activists combine to qualify him as an uncut diamond which could be carved into any shape.
In the past four years, Barkindo has catalysed his innate skills and activated his rich experiences in galvanising global coalitions and mustering the critical countermeasures against the challenging global economic complexities imposed by energy demand crisis. These measures have pulled back economies and world’s biggest corporations from the precipice.
The 24-nation producers in the OPEC+ coalition made huge sacrifices, key non-member producers provided needed political and diplomatic support, and operating companies displayed courage; but a Nigerian maestro led the charge in rescuing the market, the industry and economies.
Sopuruchi Onwuka is the former Acting Chairman, National Association of Energy Correspondents (NAEC).