A Talk with Libyan Oil Minister Shukri Ghanim

There were predictions before the recent Organization of the Petroleum Exporting Countries (OPEC) conference about the participation of Libyan Oil Minister Dr Shukri Ghanim, because of the existing crisis between the Libyan Jamahiriyah and Switzerland, and the fact that a number of Libyan officials have been put on a Europe-wide travel ban by Switzerland, which includes Austria, where the OPEC headquarters are based. The concerns did not subside despite the fact that the Austrian authorities were obliged to give Ghanim a transit visa because of what diplomatically is known as the Headquarters Agreement.

However, Ghanim arrived in Vienna and participated in the conference, and he even stayed an extra three days in the Austrian capital in which he lived in for years during his work at OPEC. This was an opportunity for Asharq Al-Awsat to speak with Ghanim on a wide range of issues including the challenges facing OPEC, current relations with Switzerland and the future of Iraq’s oil sector.

Ghanim stresses that the decision adopted by OPEC at its last meeting to keep its production ceiling unchanged is correct particularly at this time, when the markets are still troubled, and are not firmly stable, despite what the markets are witnessing of relative improvement and increase in demand, and particularly as non-OPEC countries continue to produce. Ghanim warns that the current state of the markets does not express the realities of the offer and demand as much as they express speculations that lead to disturbances.

With regard to the issue of adherence to the quotas by the member countries, and the need of not exceeding these quotas, it is an issue that enjoyed significant attention in the statements issued by the ministers before their meeting, and then it seemed less important when the decision was issued; moreover, the OPEC secretary general pointed out that there is a need for all to adhere to the decision, but he admitted that it would be difficult to be strict in the light of the current economic conditions. In reply to a question about this issue, Ghanim points out that the problem of exceeding the quota is a difficult one because of the disparity between the figures presented by the member countries, and those taken from the oil bulletins. Ghanim continued by saying that the countries stress that the real figures are those presented by them as primary sources, despite the fact that the secondary sources say otherwise. He adds that non-adherence does not seem as bad as those reflected by the secondary oil bulletins.

Ghanim emphasized that the production of oil is a daily production of millions of barrels; sometimes an oil well produces, sometimes it needs maintenance, and at other times it might be difficult to reopen. This means that the situation is not like a tap that is easy to open and also to close. It is a complex process that requires organization. Nevertheless, adhering to the quotas is necessary in order to preserve balance in the oil markets, and whoever does not adhere, we call on him to adhere. Ghanim rejects that this might be an encroachment on the rights of some countries to utilize their oil wealth, and to get maximum benefit from this wealth. He reminds that joining OPEC means accepting its policies, and sometimes this leads to concessions in order to reach specific aims through a specific organizational method.

With regard to the concerns some sources might have because of the fear of the lack of international demand for oil, Ghanim says that despite the financial incentives ratified by the western countries, the picture reflects fragility despite the slight improvement, and hence arouses fear that a setback might take place. This is particularly true as the debt crisis threatens many western countries, especially Greece, and even Spain and Britain. There is a fear that the world economy is no longer strong in its fundamentals, despite the increasing demand from countries such as India and China, which are building their stocks.

the Libyan Oil Minster went on to explain that the oil sector and the complications that affect it look like a mosaic, a mosaic in which there are many factors and not only offer and demand; there is the world economy, there are crises, there are real estate and industrial problems, and there are worries about demand. All these and other issues complicate the situation and influence it greatly, exactly the same as an orchestra all of whose members play well, but the music becomes out of tune because of the mistake of a single player.

With regard to the stocks, Ghanim stresses that they still are higher than their average of the past five years. He points out that the question always is about expectations, and if these expectations predict high prices, the stocks are used.

With regard to prices, which currently range between 70 and 80 dollars per barrel, Ghanim stresses that the prices fluctuate, and are no longer measured on the basis of what we consider right. Sometimes the prices rise suddenly, and then go down suddenly, sometimes overnight, and sometimes on a weekly basis because of these fluctuations. For this reason assessment of prices requires a long period, because sometimes they are affected merely by a statement, a political incident, or a storm, which increase their fluctuations.

With regard to the impact of the expected Iraqi oil production, Ghanim says: “Iraq has been deprived of production for many years for reasons beyond the control of all. Iraq is a country with huge oil resources and great production. However, these figures about which we are talking will be achieved only within seven to eight years, and during this period demand will improve. When this happens Iraq will adhere, because adherence is in its interest in order to bring about the required balance to the markets.”

With regard to the deteriorating crisis between Libya and Switzerland, Shukri Ghanim stresses that Switzerland has worked to introduce a blacklist that includes 188 Libyan personalities, including Col Muammar al-Gaddafi, his family, the prime minister, and the foreign minister, and asked all the countries (the members of the Schengen Agreement) not to deal with anyone whose name is on that list. This has upset many sides, including the western allies of Switzerland, and they rejected the Swiss exploitation of the Schengen mechanism as a weapon and for purposes other than its original ones; this has motivated the Jamahiriyah to reciprocate.

In reply to the question: How can a state allow a case caused by an individual to expand until it becomes a political crisis? Ghanim stresses that the issue is not one of an individual, because when a country allows one of its citizens to be insulted, it will allow its entire people to be humiliated. He uses as evidence the proverb. “You have been eaten the day the white ox was eaten [a fable about three oxen who were too strong for a lion, and hence it drove a wedge between them, and managed to eat them one by one].” Ghanim stresses that that individual in particular carries a diplomatic passport that grants him more diplomatic immunity.

In reply to a question about whether Libya is afraid for its economic interests in Switzerland, Ghanim explains that the interests between the two countries are not of great importance; however, he hopes that the crisis will be resolved.

( Asharq Alawsat )

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