Political upheaval in Venezuela – a founding member of the Organization of Petroleum Exporting Countries (OPEC) – does not pose any operational impediments for the crude producers’ group, according to its Secretary General Mohammed Sanusi Barkindo.
Crude producer Venezuela is facing heightened political tensions and moves against its incumbent President Nicholas Maduro, who took over the presidency when his late mentor Hugo Chavez died in 2013.
In recent years Venezuela has experienced economic collapse, accompanied by acute food shortages and inflation reaching at least 800,000%. In its wake, Maduro launched alleged crackdowns on the opposition. It led opposition leader Juan Guaidó to declare himself “interim president” on January 23, a move backed by the U.S., European Union and several of Venezuela’s regional neighbors including Brazil and Argentina.
As the Guaidó-Maduro tussle continues, the country has seen power blackouts, U.S. sanctions and a decline in its oil production to less than 1 million barrels per day (bpd), which could fall below 700,000 bpd next year, according to Rystad Energy’s projections, should the impasse and sanctions continue.
However, speaking at IHS Markit’s CERAWeek conference in Houston, US on Tuesday (March 12, 2019), OPEC Secretary General Barkindo said the organization has to remain “apolitical” about the situation and “respect” the internal process in the country.
Market conjecture is rife on who would speak for Venezuela, should Guaidó decide to send an envoy to Vienna at OPEC’s next oil ministers’ meeting on 17 April. When troubles in Libya surfaced in the wake of its civil war in 2011, oil ministers from rival factions claimed their stake on the OPEC table, and commentators fear a repeat of the situation.
But in a response to a question by Forbes, Barkindo said the situation posed “no operational impediments” for OPEC. “Venezuela holds the rotating presidency of OPEC, which is a largely ceremonial role with no executive authority. We will continue to engage with the Venezuelan government as valuable partner in our efforts to ensure stability in the oil market.”
However, he sidestepped a question on whether OPEC would engage with Manuel Quevedo, Venezuela’s current oil minister appointed by the Maduro, who is on the U.S. Treasury Deparment’s list of sanctioned Venezuelan officials. The move could have potential legal ramifications.
Away from Venezuela, Barkindo also said efforts of U.S. lawmakers to hit OPEC with anti-trust action – dubbed the No Oil Producing and Exporting Cartels (NOPEC) Act – would be counterproductive for American consumers. The legislative process is said to enjoy the support of U.S. President Donald Trump as well as that of key Democrats and Republicans in Congress.
“I’m aware of such calls but OPEC cannot comment on or intervene in the legislative process of another country. All I can say is that the global oil market, including the U.S. has achieved stability with the cooperation of OPEC. So any action to hit OPEC in this fashion will not serve the interests of American consumers.”
Barkindo said he understood the political situation in U.S., but hopes that “reason will prevail in the home of free markets.”
The Secretary General also said that President Trump’s frequent attacks on OPEC via Twitter are one of the new additions to the “recent uncertainties because the President doesn’t give notice before he tweets.”
“We welcome the president joining this dialogue. He is the number one [oil market] producer and has become a major exporter on a global scale, not only of crude oil but also liquids and liquefied natural gas. Because of the importance of this industry in the U.S., a very strategic segment of his constituency, it is understandable why he is keeping his eyes on what happens globally on this industry,” Barkindo concluded.