(Here’s the link to the official communique. )
Opec’s webcast from its 151st meeting in Oran, Algeria appears to be just beginning,
We can see a bunch of people gathered around the podium… No sign of Mr. El Badri (Opec secretary General) or Mr Khelil (Opec president) yet though…
Just a reminder, Opec has cut by 2m barrels according to the news wires.
Oh it’s gone all quiet.
Conference about to start imminently
Apologies for typos etc…
We think we just spotted John Hall of John Hall Associates walking across the camera – we wonder if he will have the first question as usual?
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All times GMT
1450: Still people faffing around the podium
1453: People faffing have gone, podium empty
1456: dum di dum di dum di dum… still waiting.
1457: Someone sat down in the presiden’t seat. But it wasn’t the president. He’s gone now.
1458: Now they are inspecting the mikes again.
1500: We’ve gone to a different shot, with flags. It’s Eithne treanor!! Official Opec correspondent extraordinaire
1504: We can definitely see John Hall of John Hall Associates, he’s on the phone….
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Reminder: Keep refreshing
1509: John Hall is off his phone
1510: Sudden burst of audio
1511: Eithne is back with her mike. Looks lovely as ever.
1511: Eithne welcomes us to the last conference of the year
She says: it was a tough conference. She hasn’t had a chance to interview any of them because they are soooo busy. No other choice at this time than to make a major cut. Heard this from Mr Khelil a while ago.
According to Eithne the cut is not official yet. They are still in closed session, adn still a few issues to debate. Issues to overcome before issuing the commmunique.
You heard it from Eithne – no official communique YET
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1514: Eithne still offering commentary:
“It’s going to be a tough year, the only thing they can do is a strong cut.
We have about 52 days forward cover, which is what we’ve averaged for the last five years. Now we’re looking at about 57 days of forward cover, which is way too much.
Comes a point when they have to stand their ground, look at the data and make a decision that shifts that position.
Many ministers looking at a price of about $70 per barrel. Market can suffice with this.
Demanding pure compliance on this.
there is still a little bit of activity around here, we tried to have a chat with them but they all say they will talk later. They also have to loook at their own economic situation. All the members depend on oil for the mkajority of their foreign income. ”
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1522: Eithne Treanor still chatting away. Talking about Russia. And saying that Opec would welcome any new member that has the ability to join, which Russia does. Azerbaijan offering a lot of support.
FT Alphaville notes that the ministers are still in closed session. This means the 2m cut figure was leaked to the agencies. The agencies are very good on this though, so we’re just waiting on more details now.
Looks like a delay… Eithne doesn’t look hopeful that the press conference will start soon. Eithne is checking in on what’s going on, she’s run out of material so she’s taking a break.
FT Alphaville will continue to monitor. We are sure it will be worth the wait!
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1532 GMT: Eithne is interviewing the FT’s Carola Hoyos, chief energy correspondent. Carola mentions the 57 days forward cover issue, and the fact we’re seeing floating storage – a sign of how much unwanted crude oil there is out there.
1542 GMT: WE HAVE OPEC ACTION – A GREAT FLURRY OF ACTIVITY – THE MEETING HAS CONCLUDED
1543 GMT: Dow is reporting a cut of 4.2 mn – can this be right???
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1546 GMT: Okay, the ministers are coming, we will get more clarification soon. There is utter madness on the floor. Some of the ministers are leaving. We are still trying to determine what the official figure is.
1550 GMT: ORAN, Algeria, Dec 17 (Reuters) – The Organization of the Petroleum Exporting Countries agreed on Wednesday to make its deepest output cut ever to counter slumping demand and falling oil prices, said the group’s Secretary-General Abdullah al-Badri.
The 4.2 million barrels per day reduction in supplies based on September production levels, Khelil said.
FT Alphaville: The actual cut appears to be 2.2 m barrels per day.
1551 GMT: PRESS CONFERENCE BEGINS
PR: 4.2 mn cut from Sept 2008 meeting – so it’s a cumulative cut to be effective Jan 2009.
Crude oil prices to be maintained at fair and equitable levels for good of producers and consumers alike.
calls on non-opec producers to cooperate
The conference confirmed 15th March will be next meeting in Vienna, shortly before Opec international seminar.
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1554 GMT: Khelil available for questions
Questions coming
1) can’t hear the question – From Petroleum argus – what happened to the quota system? And how is the cut going to be implemented.
Khelil: Still have the same quota system, which has not been changed. The allocation of the cuts is just the same as the allocation for the previous cuts.
2) Question not in english
Khelil: answering not in english
3) John Hall of John Hall associates (3rd quetsion – not bad guess!)
Q: I know each member wants something different, we know you don’t like talking about price but can you give us an indication of where you want the price to be? And will there be a return of a price band?
Khelil: you know the story about $147, our view was that it wasnt due to tension in s&d but mainly form speculation and that’s how we got there and not due toa lack of oil in the market.
We put more oil and it didn’t affect the price.
The drop in oil is due to the repercussions of the financial crisis, but that’s not the only reason though. There is some speculation because speculators pulled out of the market making the drop faster than otherwise expected.
We don’t have an official target. There was some talk about 70-80 dollars, but what we’re dealing with is overhang in the market. And we have more than 57 days of stocks in the market, and oversupply in the stock. So the opec decision is to take into account the destruction of demand, and also the long-term interest of the oil industry. To make sure we still continue to have investments to ensure we have supply when economy becomes healthier. The answer is we don’t really have an oil price target. We hope prices will stabilise.
At least in the official phase and evolve to the target that will be in the interests of producers and consumers of around $80.
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1600 GMT: question in french
Khelil answers in French.
Bloomberg: what is the new quota?
Khelil: Same as before – ALgeria will cut by 200,o00
Khelil: 29 point 045 was the target before, you make the calculation! Take 29.045 minus 4.2 which will give you the new number.
Next question in French (FT Alphaville’s limited French)
Khelil – la federation de russi n’est pas un membre de Opec
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Khelil: Iraq is not part of the quota system, because of the special circumstances. .. Iraq can produce as much as they are able to.
Argus Media: Why are you cutting from September instead of current production, and why are you not announcing current quotas?
Khelil: Of course this is an internal debate, and we wanted a clear basis. There is no need for us to publish the quotas. I gave you the cut for Algeria so you can figure out what the implications are for the other countries (Khelil likes journalists to do maths clearly).
Another question in French: (We believe about countries that are not members of Opec.)
Khelil: (rough translation -something about russia, which is still not a member of Opec, we work with all the non-opec members. We hope these countries contribute to stabilise the market)
Another question in French – the answer is that the official cut is 4.2 m per barrels since September.
Q from Reuters: Are you concerned about the perception of this cut, because it’s taken from a date in the past, and has implications for credibility of the members?
Khelil: What’s important is that each country has a reduction to implement. And from that you can deterimine what percentage each one of us will have, I can assure you alegria will implement, but you will have to wait till Januray to see if it happens. You have to wait to see it, but i can tell you it will be implemented and implemented very well as we don’t have any other choice or the situation will get worse.
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Khelil again refuses to clarify the exact quota other than saying take 29.045 and deduct 4.2 from it.
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1615 GMT: Question in Arabic, FT Alphaville has no linguistic skills here unfortunately. Mentions Rosja (which we assume means he’s talking about Russia) – unfortunately no questions regarding Russia in english as yet.
1618 GMT: FT Alphaville has done the maths in the meantime – that’s a total quota of 24.85m b/d, although you have to account for the two non-effective members who are Indonesia and Iraq, which we believe makes the actual quota for the Opec 11 somewhere around 25.1m b/d – (but that’s an initial calculation).
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1424 GMT: How much do you expect non-opec countries to cut?
Kheli: We’d like them to contribute as much as Opec. They haven’t agreed anything with us. We don’t have a formal agreement, but they have acted in the past on their own. And they’re not members because of their sovereign decision. So they will have to make their own decision.
Khelil: We did better than you expetced so we hope you are surprised. You were expecting much less than what we decided. And we are in a very deteriorating environment so we are always ready to hold meetings. As you remember we have held meetings at very short notice. We had one in Sept, Oct, November and now Dec 17. Next scheduled meeting is in March but if we need to we can have it before the 15th of March but we have to see how the markets react.
Q: We are a bit confused on the cut – what is the new element of the cut?
Khelil: 2.2 m,
So 29.045 – 4.2 so january we should have 24.8 or something around there.
Q: What’s the new Opec ceiling?
Khelil – that will be the new Opec ceiling
Question in Arabic about Barack Obama
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1627 GMT:
Q: What’s Opec’s current production?
Khelil: We don’t have a number.
1632 GMT:
More french……
Last question: how much will Saudi Arabia cut in January?
Khelil: I don’t have the exact number but around 1.8m I believe.
Khelil: Thank you to all the press, and I hope you have all had a chance to visit the city and learn more about this beautiful city, if some of you are still staying here - some of us are leaving tomorrow – I would advise some of you to take time to see the city. I would like to thank all who have contributed to making this event very successful, to staff of hotel, ministry of energy and mines and the national oil companies Sonatrach and all of thsoe who have contributed to making this event well-organised, and thank the Opec staff, who brought all the expertise to make it a very successful meeting. Have a nice return to your country wherever you come from. Most of our ministers are going to London because there is a conference there thanks to an invitation from Mr. Brown, and then some of us are going to Moscow for a meeting of the gas exporting countries, so maybe see some of you there. Goodbye.