Saudi Arabia, worlds top oil producer is playing the godfather role as the Organization of the Petroleum Exporting Countries, OPEC begins its first formal discussions over its next secretary general when it meets December 1.
Saudi Arabia thought to back a change as the producer group struggles to contain a volatile oil market and withstand energy transition pressures.
Sources told S&P Global Platts that Riyadh is supporting the candidacy of Kuwait’s former No. 2 OPEC envoy, Haitham al-Ghais, to replace incumbent Mohammed Barkindo, who remains popular with several African countries. Barkindo, who has held his post for six years, cannot stand for another term but may be asked to remain if a successor cannot be agreed.
“The Saudis are pushing for a change,” one OPEC source said, asking not to be named.
Ghais declined to comment in advance of the OPEC meeting, and Saudi Arabia’s energy ministry did not respond to a request for comment.
Deliberation over a possible new secretary general comes at a difficult moment with OPEC and its main ally Russia being blamed by the US and other key customers for pushing up oil prices. Some US lawmakers are now seeking to revive so called “NOPEC” legislation that would subject the organization, which controls about a third of world oil supply, to anti-trust legislation.
Dated Brent has climbed almost 50 per cent to $74.95/b year-to-date.
Meanwhile, renewed concerns over COVID-19 have focused attention on demand, with S&P Global Platts Analytics expecting global consumption to reach 103.2 million b/d, 700,000 b/d above pre-pandemic levels in 2022.
“Political pressure on OPEC from oil consuming countries is nothing new, but has become particularly acute since oil prices reached multi-year highs in October,” said Paul Sheldon, Platts Analytics’ chief geopolitical advisor. “An historically rare, price-related SPR release from the US and others sets a new precedent OPEC+ may need to incorporate into future production decisions.”
This week’s agenda includes time to canvass for other potential nominees. Iraq may present a candidate, sources have told S&P Global Platts.
Another term for Barkindo would require a change in the OPEC regulations, though past secretary generals have remained in office to give ministers and delegates time to resolve impasses over a successor.
The official who can serve up to two three-year terms is OPEC’s public face to international bodies and is responsible for convening meetings, including extraordinary summits when markets are under extreme pressure. The secretary general also oversees day-to-day affairs of the secretariat in Vienna.
The position must be confirmed by a vote of the 13 member states — a politically fraught exercise that has often exposed geopolitical rifts, with allied countries usually voting in blocs. The first vote would likely come at OPEC’s next meeting in May or June.
Ghais is a familiar face to ministers. He served as Kuwait’s OPEC governor, or No. 2 envoy, from 2017-21 and chaired the Joint Technical Committee which advised the OPEC+ alliance in 2017, the first year the Vienna-based organization teamed up with Russia and nine other key producers on production cuts to end a three-year slump in prices.
He also served as a member and then chairman of OPEC’s internal audit committee from 2018-2021.
“Haitham is much appreciated by all countries,” another delegate said on condition of anonymity.
Since leaving his OPEC governor post, Ghais has served as Kuwait Petroleum Corp.’s deputy managing director of international marketing. He has previously held other senior positions at KPC in Beijing and London, in a 30-year career in the industry.
OPEC’s sub-Saharan African contingent, which has grown in recent years, is understood to be largely behind a continuation of Barkindo’s tenure, though he has not declared any intent so far to pursue another term.
“Barkindo has to decide what he wants to do,” said a source familiar with the secretary general’s thinking. Barkindo declined to comment when contacted by Platts.
He is one of Africa’s most high-profile oil officials and is seen by his backers as a counterweight to the perception of OPEC being dominated by Middle East heavyweights such as Saudi Arabia.
He has a long history with OPEC, having been a member of the Nigerian delegation from 1986 to 2010, along with holding several positions with Nigerian National Petroleum Corp., including as its head from 2009 to 2010.
He has held the secretary general post as the group cemented its OPEC+ alliance with Russia and increased OPEC’s outreach to US shale rivals.
However, changes to OPEC’s membership over the past few years could also impact the succession race.
Since the last secretary general election, Qatar, Ecuador and Indonesia have quit the organization, while Gabon, Equatorial Guinea and the Republic of Congo have joined, bolstering Africa’s influence.
If the Gulf states are unified behind Ghais and the Sub-Saharan African countries rally for Barkindo, that would leave North Africa’s Libya and Algeria, Iraq, Iran and Venezuela as the swing votes.
Iran has historically not supported candidates put forward by its longstanding Gulf Arab rivals. Iraq is mulling a candidate of its own, sources said.
“Haitham left good friends in the [Board of Governors]. Many big guys are still supporting [Barkindo],” an OPEC source said. “This decision is political at the highest level.”