The JMMC Established by OPEC-non-OPEC; Not a Decision-Making Body
Iran’s Minister of Petroleum Bijan Zangeneh has said the Joint Ministerial Monitoring Committee (JMMC) is not legally competent to make decisions about adjustment of production quotas.
In an interview with S&P Global Platts and Bloomberg News in Tehran, he said that “all decisions will be adopted only in the OPEC oil and energy ministers’ meeting in the presence of all member countries and based on consensus.”
The interview was carried out ahead of September 23 JMMC meeting in Algeria.
Will you attend the JMMC meeting next week?
I’m not going (to the meeting). Mr. Kazempour Ardebili, will head the Iranian delegation in Algeria. But Iran’s position in terms of the current agreement will be made in the ordinary meeting of the OPEC Conference.
What are the positions of Iran in the Sunday meeting in Algeria?
We believe that this meeting doesn’t have any decision-making mandate. The JMMC doesn’t have the authority nor is it legally qualified to reach decisions, not on any issue. Its observations aren’t determining either. It only observes and monitors and it just watches, observes and reports to the meeting exclusively for the ministers present in the meeting. The JMMC has no right to make any other decisions. I’m going to say something now in general about OPEC, there is something called the Declaration of Cooperation (DoC), we celebrate it and appreciate it a great deal. The non-OPEC members that have joined us in the past two years, especially Mexico and Russia, have worked with us and have really helped us stabilize the market very much. But, the DoC is not supposed to replace OPEC.
My analysis now is that OPEC is the victim of a creeping movement that’s a result of both cooperating with the US and fear of the US NOPEC bill. They are sacrificing OPEC, they are slowly and gradually destroying OPEC without directly saying so, they want to gather some names together to create some sort of "Forum" to replace OPEC.
We never believe in the idea that you should commit suicide for fear of death; so we’ll carry on what we’re doing. In the nearly 60 year life of OPEC this sort of thing has happened 10 times or more, and there will be more ups and downs. You mustn’t just sacrifice OPEC out of fear — in my view OPEC is one of the third world’s biggest accomplishments, not just in terms of oil producers, but it’s an organization that can impact the world’s economy and it has a good, strong foundation.
And so there are some countries which want to dismantle OPEC and they want to make this thing [JMMC] much bigger than it is, out of proportion, pointlessly. If you pay attention you’ll see they are making this OPEC/non-OPEC meeting into a big deal while it’s not that important. This entire story around OPEC and non-OPEC was about cutting 500 thousand barrels. The rest of the countries haven’t cut anything. In fact, they didn’t have production capacity. Look at those countries which cooperated with us. We are thankful that they’ve cooperated politically and sympathized with us, but they all produced under their quotas and that’s why conformity of some of them reached nearly 200 percent and 180 percent. They couldn’t produce at all, apart from Russia and to some extent Mexico.
Russia has helped a while and the point is that they’re not our problem in this situation right now, they helped and then that period will expire, and they can cooperate as much as they want based on their own interests as a country that is a non-OPEC producer. But expectations from the OPEC countries is higher, particularly in the current situation — and I’ve previously mentioned this many times — it’s not appropriate that two OPEC members start leading and taking on the leadership of an anti-Iranian movement.
Do you mean UAE and Saudi?
I’m not mentioning any names at all. But the two OPEC members are taking the helm of global anti-Iran campaign in the oil market, this is completely obvious and it’s not right. It’s not either right as neighbors or as partners. They take on this anti-Iranian tide and then they also take onboard cooperation with America in order to hurt Iran, and then they pull some non-OPEC members along with them who don’t necessarily understand the depth of the political complexity and the other aspects that I don’t want to explain here.
For instance they will say something like ‘we won’t let there be a shortage in the market’, which on the surface is a very good idea to say or is economic. But in my opinion such a statement has nothing to do with economics and is 100 percent political and against Iran. Anyone who says they will compensate for the shortage in the market is speaking against Iran. And it’s a political statement; I do not see this as economical. There are not any economic principles in it. And contrary to what they say, they’re actually involving not only OPEC but also non-OPEC countries in a political game. But as this political game is one that is working in tandem with the US policies, some people don’t want to talk about it.
Now, some OPEC and non-OPEC countries are working in line with moving along the approach of the US. Unfortunately, a part of the Secretariat is also moving in this direction and we have realized this. And I want to notify the Secretariat hereby to be careful about its work, a part of its works, and remind them that OPEC is an independent organization, it is not a subsidiary of the Department of Energy of the United States, and its officials must pay attention to this. What matters is the members' will. We don’t have big members or small members, all the members are equally participating in the Organization's activities and every member's views should be taken into consideration. And my main issue is that, the JMMC meetings is given the mandate to monitor market and report .As you may recall I was head of the OPEC's Ministerial Monitoring Subcommittee(MMSC) for eight years at one time ,and the body never had all this fuss and noise before.
Even though, some non-OPEC countries participate in it, it doesn’t make much of a difference anyway.
You positively talk about Russia. But apparently, Russia and Saudi Arabia are together…
I said before. Some countries have complicated political objectives expressed in simple, economic terms, while they are not economic at all. When they say ‘we will sort it out [oil shortage in market],’ any wise person says ‘that’s right, demand and supply should be balanced naturally. But if you look at it a bit closely, it is not an economic argument. It is indeed a signal to the US: put as much as pressure you want on Iran, and we won’t let the market face any problem. This is what we should get. This is a political message. I don’t believe that Russia wants to cooperate with the US and blow a strike to us, but some others do.
What’s the JMMC’s role in pursuing the US will?
It is not to make a decision or determine or distribute quotas… a group here has made up something against Iran and assume that they can succeed. These are bad intentions. I announce here that what they do is not appropriate,”
Have you talked with other OPEC members and Russia to help reverse these moves that are in line with the US objectives?
I don’t say that Russia is acting in line with the US objectives. Russia is big enough not to do so. But some might take advantage of Russia’s cooperation. I have contacted some of the ministers, talked to them, wrote letters and explained to them, recently, and have drawn their attention to this issue.
Have you only talked to OPEC members?
No, I have also talked with non-OPEC, too.
We have heard that you have written some letters to the OPEC Secretary General about some members not abiding by the agreement.
Yes, they are violating and they want to bring OPEC on board and pursue their illegitimate goals. They are both overproducing and insinuating a wrong understanding from the OPEC agreement. If they want to produce more, we cannot stop them, because there is no forcible instrument in OPEC. But they shouldn’t do it in the name of OPEC. They should announce ‘the US has phoned and told us to increase our output, and there is no other way but to do so.’ Today, some of these countries tell us ‘oh we cannot take much more oil from you [Iran]. Please understand us. We have long relation with US and we can’t ignore what it wants.’ Ok! We don’t want to fight with each other. But don’t say it’s what OPEC said [decided]. They should say it’s their own decision because they can, it is what it is, take it or leave it. They should say ‘we increase the production because we can and we don’t pay attention to anyone, and they should also say we can’t resist the US instructions. But don’t put it on OPEC, and I think that is why they are destroying OPEC.
Are you worried about OPEC as a founder member?
Yes, we are worried about OPEC but much more worried about Iran itself. I support that organization for Iran, not the other way around. We established an organization, from which the third world has benefitted so far. It can still play a role, but the world changes, and there are developments. We shouldn’t forget one principle which is power. Influence comes from power, not reasoning. This is very important…
OPEC has ups and downs. OPEC basically makes sense when it cuts output. When prices are high and the market is demanding, everybody does what it wants. OPEC is meaningful when it wants to cut production in order to raise prices. There, it is influential, I mean if we are not careful, we will be digging OPEC’s grave with our own hands.
Haven't the ministers to whom you wrote responded yet?
No, but they have received the letters.
Do you think Saudi Arabia and Russia can produce more than the amount they have poured into the market so far?
Some countries are relying on their inventories. They give some numbers for their inventories but I don’t know if it is true or not. I don’t know whether or not the volume of inventories that Saudi Arabia says it has outside the country and elsewhere are real. But from now on, I think, they will rely on their inventories rather than their production to pour oil into the market. I think they don’t have excess production capacity. But eventually, it won’t last long. No international analysis says that missing Iran’s oil can be tolerated in the long run.
Iraq is increasing its output…
No, it can’t. Iraq hasn’t increased its production. It is a long time that its production has stayed fixed. There is a reason,”
I don’t talk about production, neither about its figure, the exports, and destinations. I won’t say a word because the Americans have assigned resources, civil forces, not military ones, in many ports and countries and they are controlling, watching and carrying out an intelligent monitoring. They watch our people. I don’t want to give them additional information; I don’t want to brag today for them, neither do I want to explain my countermeasures. I don’t want to say how much we produce. These all would help them to obtain free information. I am not going to give them that. The oil industry is working with full force. I won’t give information. We will see eventually.
Do you confirm 35% down exports since April?
I don’t give any figures.
What about tankers and shipment, buyers?
I don’t give any information. Whatever I say, the US will take advantage of it against us. It is like ‘anything you say may be used against you in a court of law,” he said with a smile.
I won’t reveal what customer, what destination, what countries, with which tanker I ship oil, how I solve my insurance problem, I won’t give any information, and you can write that down.
Can you say who the buyers are?
No. Look, if America finds out anything that could work in favor of the U.S., I won’t talk about it. They will use whatever I say against us.
I’m not going to release the name of customers and shipping companies. I’m not going to disclose how we send our cargoes or how we solve our insurance problems. I’m not going to talk about these points, because they work to their advantage.
If the forthcoming JMMC meeting reaches a decision that’s beyond the authorized proposal, does OPEC have an approach on what to do?
It’s void. It’s invalid, it’s a void decision. Such a decision is illegal. The JMMC has no decision-making mandate. I will say this, that in general the JMMC has no right to make decisions. Any decisions made by JMMC are invalid. It can only observe and report. Decisions can only be made at OPEC meetings in the presence of all OPEC members and through consensus of members.
The place for decisions is at OPEC. This body [JMMC] is monitoring only. All this fuss, advertising, promotion and placards-this is just to propagate for pulling OPEC apart.
If the JMMC enters the ministers meeting at OPEC...?
Well, ok. Without a moment of hesitation, I will definitely and definitely veto any decision that threatens our national interests. Vetoing means that the decision isn’t legal, it’s illegal if there’s a veto.
So, right now you won’t be at Algiers, if they make a decision.
They can’t. The Algeria meeting is not an OPEC Conference.
You will veto any decision that comes to OPEC?
I said that any decision that poses even the smallest danger to our national interest, without any hesitation at all, I would stand in its way. I’m there for my own national interest alongside everyone else, and this is true for everybody.
What are your views on this current agreement and its continuation?
The agreement doesn’t really exist anymore. It’s finished. Russia came long, cut 300 thousand barrels and then got that 300 thousand back, therefore it’s over. There’s no agreement left really. I talk to OPEC. I don’t have much to say to non-OPEC.I am addressing OPEC. I respect their [non-OPEC] cooperation in the future, but it doesn’t need all this propagated meetings, logistics and spending.
So in December if they want to renew/continue this agreement, what will your position be?
We'll discuss it then.
Do you want a permnent seat on the JMMC?
No, whereas it is just observing and monitoring, indeed it only monitors the situation; there is no reason to need that. All my time and efforts and those of my colleagues are being focused right now on this economic war that America has launched against us.
Do you think the way that OPEC members, Saudi and Iraq do in terms of production increase; do you agree that they are using OPEC as a political tool?
I said that some OPEC members, I haven’t mentioned any names. I’ve said some OPEC members, contrary to everything that they’ve said themselves and contrary to their own motto against politicizing OPEC, are actually politicizing the entire organization in order to materialize the will of the U.S. And they are paving the way for the US. When they say ‘we have no problem in securing the market’ what they mean is, ‘come on Mr. America, impose sanctions on Iran as much as you want and destroy the people of Iran and it’s not a problem, we are with you’. Politically, this is what it means. It means cooperation with the US in sanctioning Iran.
Anyone who says this is cooperating with the US. Whoever says this, whoever at all, says ‘we will make-up for any shortfall in oil’ is going along with the Americans and is giving a greenlight to the Americans to sanction Iran, to exacerbate Iran and to deepen sanctions against Iran.
Have there been any new agreements with Russia?
There are always new agreements.
Are the agreements in relation with oil exports or anything?
On exports, as I mentioned, I won’t provide any more information.
So, there are new agreements or they are in the process of being made, or they’ve been signed?
Now, the trend is good. We’ve moved forward.
In the time that there’s been this agreement, has share of any OPEC MCs gone to non-OPEC countries?
Look, OPEC won’t give any share of anything to anyone. The Persian Gulf countries won’t leave a single barrel of their market share to anyone, unless they cannot produce. Even what they cannot produce, that they won’t give that up either. Practically they don’t have it in hand, maybe they’ll tell the other side, we [give it] to you, but they haven’t been able to use it themselves. If there’s food that they can’t eat, maybe they’ll donate it somewhere. But they won’t even let one barrel go.
If you accept that Iran’s oil production will drop or its exports will drop, will we have negotiations with OPEC MCs beforehand like what we did in 2013 and 2014 for the return of Iran’s barrels to the market?
No, I’ve already written to them that, firstly rather than exports only production is part of the OPEC’s criteria. And in my previous communications I have mentioned, if anything happens to my exports or production level, after the problem is resolved, regardless of any decision, without the need for any approval at all, I will resume my original production trend. Without the need for obtaining any approval I will return to my prior production level. I’ve told this to OPEC MCs and I’ve said it repeatedly.
How do today’s sanctions and situation differ from the situation in 2011?
Well, that one was UN Security Council sanctions then. This is just the bullying of the US, at that time it was multilateral, international sanctions. Right now, no country apart from Zionist Regime and two other countries in the region — two of our Arab brothers — no one else is with the US.
But they are cooperating ...
No, it is not Cooperation… if someone is bullying and holding a sword, it is a different story ... but these sanctions are not legal and it’s not like everyone is afraid of the UN and contravening some laws.
Right now, from one perspective it’s harder and from another perspective it’s simpler. It’s harder from this point of view that the US has all the experience of the previous round, and it’s already worked out some of our methods/workarounds and therefore we have to use more complicated, new methods and the US is a lot more persistent, especially given the US have made up its mind to cut out production to a great extent in November even if in a symbolic way. In my opinion this is very symbolic for them.
And we are doing our best, making all efforts, but I don’t want to say how much and to what extent we’ve been successful, because he (the US/Trump) will find out. That [previous] round was UN-related; UN sanctions are very heavy in terms of the law, meaning that anyone who violated the sanctions was subject to all the international laws and regulations. Now this is just America that is throwing its weight around, it’s holding up a sword and calling for challenge over everyone. And now, we’ll do our best and God Willing, God will help us if we are honest.
Rick Perry, Al-Falih and Novak met recently, do you think this was just promotional/propaganda or how much was it about affecting production?
No, I think this is all mostly propaganda. The Americans routinely go to different places, following, threatening, they go here and there and doing whatever is that they do and we know about what they do. Any company that contacts us, they contact them half an hour later, they talk to them, and they routinely monitor and eavesdrop and follow and keep an eye on our managers. They are clearly following everything.
What’s your analysis of the current market conditions and in the months ahead, considering winter is ahead, what does the market need? Some more barrels?
You need to understand from price change trends. The Americans are trying really hard to prevent prices from going up until November. But if you take a look, the trend for prices right now is upwards and they bring prices down with an intervention. But if they leave it alone, the price trend is to rise and to keep rising.
What’s a suitable price for oil right now?
Right now, a suitable price is $80. Now, the higher it gets the better it is for us. But it won’t. The US and some OPEC members are not allowing it through their meddling.
Some sources have said that Saudis want high prices, i.e. above $80.
No, not right now. The US doesn’t want WTI to go up, if it goes up Trump won’t get the votes… They’re putting all their efforts into WTI not going up. He brought it under $60 and now it’s going up. As soon as it goes up, they throw in some from inventories, from here and there and they won’t ever tell the truth about what they’re doing. But the DOE report on production said that the market cannot sustain Iran’s absence from the market. It cannot tolerate Iran’s removal from the market.
Do you think that if production really drops heavily, how much will the price of oil go up; let's say in the worst case scenario?
The higher the better.
What needs to happen for these sanctions ... what has to happen, does Mr. Trump have to go? What will and needs to happen in your opinion, what can Iran do? Iran has to do something.
Right now, I don’t want to enter these discussions.
Well something has to be done; Iran can’t just keep going till it hits a dead end?
Now Trump could do so and it would be good for him to suspend the sanctions.
In Vienna I remember you saying in terms of Russia’s oil supply, we’re neither permanent friends nor enemies [in terms of oil issues] — is that still your view?
It’s always my view. It’s not about being friends, brothers or enemies.
And Russia, what’s your view on the fact that it says on the one hand it’s against the sanctions but then on the other hand it will secure oil supplies?
Ask them, you need to ask them.
Can you update us on the Iraq-Iran swap situation?
It’s underway. It’s coming on trucks and it is being received.
Do you want to increase it?
Yes, we would like to and we are after increasing it.
And in terms of selling oil to Russia, are you seeking more than the current level [100 thousand barrels]?
We are keen to provide more oil to everyone.
Is Iran using discounts more now, as a tool?
No, it’s not really that important.
So what is Iran’s position on the current agreement, will you support it?
We’ll see at the time.
Would the US be able to reduce Iran’s oil exports to zero or it’s just a bluff?
I think that Mr. Trump has made such decision without consulting experts even within the US administration to reduce Iran’s oil exports to zero and he insists obstinately on implementing his decision. But he recently realized that such decision is impossible and therefore he is seeking to reduce Iran’s oil exports to zero, albeit symbolically, for one month. Therefore, Mr. Trump is seriously trying his best to reduce Iran’s oil exports to zero. Of course, this is just one side of the coin as we have not our hands and feet tied. In addition to doing our best, we believe that divine hands are at work.