Opec and non-Opec in Istanbul: More a turkey than a delight

You would not want to be the organiser of a prestigious oil industry conference right now. Your speaker list is finalised, your delegates booked in, press applications scrutinised, and then the energy minister of one Opec member or another drops the bombshell that an informal meeting of producer countries will take place on the fringes of your event. Carefully crafted plenaries and break-out meetings with networking opportunities are scattered to the winds as the media circus hits town.

That’s what happened with last month’s International Energy Forum in Algiers and it looks to be the fate of the forthcoming World Energy Congress (WEC) in Istanbul. Venezuela and Algeria have indicated that some Opec and non-Opec producers will meet so that the former can try to rope the latter into the proposed but ill-defined production deal not so much forged as cobbled together in September.

But let’s get some perspective on the prospects for an Opec and non-Opec deal. To start with, any agreements are going to be so heavily caveated as to be meaningless for now. With Opec not defining the extent, allocation, start date or length of any constraint that its members could apply until the end of November, and with Iraq grumbling about numbers already, non-Opec ministers are not going to commit themselves to anything.

And who are we referring to when we talk about potential non-Opec participants? The only one mentioned as taking part in the get-together is Russia. Producer of some 10.8mn b/d in January-August, its participation is held out as the big prize. But we already know that the bottle it brings to the party will be half full, at best. Oil minister Alexander Novak has been clear — Russia is open only to an output freeze, not a reduction, he says. “We are thinking in terms of keeping production at the level already achieved,” Novak says. And he suggests that any measures implemented could be maintained for perhaps just six months. As Russian production hit a mighty 11.1mn b/d in September, the highest since the break-up of the Soviet Union, a freeze would be no great sacrifice, maybe no sacrifice at all.

Mexico will also be represented at the WEC, but will surely not entertain participation in output restraint. So, that leaves us with advertised WEC official attendees from Bahrain, Yemen, Thailand, Sudan and South Sudan.  To reprise Stalin’s contemptuous phrase, ‘how many divisions has the Pope?’

Talk of non-Opec’s contribution to Opec’s (proposed) output ‘cut’ is public relations spin. But, if it helps keep crude at $50/bl or thereabouts, most producer countries will be happy(-ish).

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