Published on 23 August, 2022

AEC Supports Saudi Arabia in the Pursuit of Oil Market Stability

Representing the voice of the African energy sector, the African Energy Chamber supports HRH Prince Abdulaziz bin Salman, Minister of Energy of Saudi Arabia, in his call for oil and gas market stability.

The current global oil and gas market is in a state of flux, with price volatility, demand fluctuations and thin liquidity causing unprecedented impacts on the entire energy value chain. At the same time, a number of producing markets in Africa are emerging thanks to resilient exploration campaigns and the increasing participation of the private sector. Thus, the need to improve stability and ensure markets are not only well-functioning but strengthened has never been more important. In this regard, the African Energy Chamber (AEC) commends HRH Prince Abdulaziz bin Salman, Minister of Energy of Saudi Arabia, for his recent statement on the need to prioritize market stability. In order to make energy poverty history by 2030 in Africa, the continent’s burgeoning oil and gas market needs to be strengthened, and the Organization of Petroleum Exporting Countries and its allies (OPEC+) has the means to do just that.

According to HRH Prince Abdulaziz bin Salman, the state of play of the global oil and gas market features significant disconnect between the paper market and the physical market, “with the paper oil market falling into a self-perpetuating vicious circle of very think liquidity and extreme volatility, undermining the market’s essential function of efficient price discovery and making the cost of hedging and managing risks for physical users prohibitive. This has a negative impact of the smooth and efficient operation of oil markets, energy commodities and other commodities, creating new types of risks and insecurities.”

However, HRH Prince Abdulaziz bin Salman offers a solution whereby OPEC+ member countries leverage their “commitment, flexibility and means within the existing mechanisms of the Declaration of Cooperation to deal with such challenges and provide guidance including cutting production at any time and in different forms as has been clearly and repeatedly demonstrated in 2020 and 2021.” In doing so, OPEC+ will ensure stability in the market and that new risks faced by suppliers, consumers and the private sector are mitigated.

“Soon we will start working on a new agreement beyond 2022 which will build on our previous experiences, achievements and successes. We are determined to make the new agreement more effective than before. Witnessing this recent, harmful volatility disturb the basic functions of the market and undermine the stability of oil markets will only strengthen our resolve,” HRH Prince Abdulaziz bin Salman notes.

“A stable oil and gas market translates into strong participation and success across the private sector. In Africa, where the private sector is beginning to play an increasingly more important role in energy-related developments, stability in the global market will be key for ensuring efficient operations and unwavering growth. In this regard the AEC strongly supports HRH Prince Abdulaziz bin Salman in his pursuit of market stability, employing member countries to leverage their positions and usher in a new era of stability worldwide,” states NJ Ayuk, Executive Chairman of the AEC, adding that, “Market stability will benefit the private sector and consumers, enabling the African continent to drive long-term socioeconomic growth and industrialization and make energy poverty history by 2030.”

Stabilizing oil and gas markets will represent a key topic that will be discussed by energy experts, African and global producers as well as executives from the public and private sector at the continent’s biggest energy event, African Energy Week (AEW). With the 2022 edition taking place from October 18-21, 2022, in Cape Town, discussions will largely center on improving stability, reducing volatility and making energy poverty history on the back of oil and gas. Key points of discussions include increasing private sector participation; industrializing Africa using oil and gas; promoting an Africa-curated strategy for the energy transition; and creating strong, competitive and global markets in Africa.

With a suite of OPEC member countries joining the conference as official delegations, partners and sponsors, the discussion on the role OPEC+ plays in stabilizing global markets will be expanded on. For Africa, the conference represents the ideal platform to explore the challenges and opportunities across the energy market, as AEW 2022 promotes Africa’s position on global energy matters. Meanwhile, for OPEC+, networking and forum opportunities offered at AEW 2022 serve to only enhance dialogue on oil and gas market trends. Therefore, in the 2022 context, AEW 2022 seeks to address the disconnect between paper and physical markets, strengthening the global sector for years to come.

AEW 2022 is the AEC’s annual conference, exhibition and networking event. AEW 2022 unites African energy stakeholders with investors and international partners to drive industry growth and development and promote Africa as the destination for energy investments. Key organizations such as the African Petroleum Producers Organization, as well as African heavyweights including Equatorial Guinea and Nigeria, have partnered with AEW, strengthening the role the event will play in Africa’s energy future.

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