Mohammed Barkindo: The departure before exit date

Dr Mohammed Barkindo was looking forward to a glorious exit from the Organisation of Petroleum Exporting Countries (OPEC) after serving meritoriously for six years. But he gave up the ghost 25 days ahead of his exit date. JUSTICE NWAFOR takes a look at Barkindo’s rise to the apex of the global oil industry and his handling of the trough and peak that characterized his tenure at OPEC.

ON July 5, 2022, Dr Mohammed Sanusi Barkindo visited Nigeria’s President Muhammadu Buhari at the presidential villa.

Barkindo went to thank the president for the support he (Barkindo) had enjoyed from the Nigerian government as Secretary-General of the Organization of Petroleum Exporting Countries (OPEC).

During the meeting, which Barkindo attended with some members of his family, he told President Buhari that “it’s an honour of a lifetime for you to have given me the opportunity to serve as OPEC Secretary-General Number 28. I’ll forever remain grateful.”

He explained that the President’s goodwill helped him carry out his duties efficiently.

“Throughout the period I served, I benefited from your tremendous goodwill. Everywhere I went in this world, both within OPEC and outside, the first person that Presidents, Prime Ministers, and Kings ask for is you. They say, how is my brother, President Buhari? I, therefore, benefited from this charisma of yours, the international gravitas you have, and it made my job much easier.”

A few hours after the happy meeting, news of Barkindo’s death broke, cutting short his six-year tenure as OPEC Secretary-General, which he would have rounded off on July 30, by about 25 days.

Announcing the sad news via his Twitter account, the Group Managing Director of Nigerian National Petroleum Company (NNPC) Ltd, Mele Kyari described Barkindo’s death as a “great loss to his immediate family, the NNPC, our country Nigeria, the OPEC and the global energy community.”

Barkindo’s ascent to the coveted seat at OPEC was seen in some quarters as the crescendo of his very successful career in the oil and gas industry.

Starting off in 1982 at the Nigerian Mining Corporation, Jos, where he rose up to the level of Principal Administrative Officer, Liaison Office, Lagos, he became the Special Assistant to the Minister of Mines, Power and Steel in 1984. From there he became the Special Assistant to the Minister of Petroleum Resources and Head, Office of the Chairman of the NNPC Board, in 1986.

While still working in Nigeria, in 1986 he was the Nigerian Delegate to OPEC Ministerial Conferences. From then, what would later become a fine run at OPEC blossomed.

Beyond his time at OPEC and unknown to many, Barkindo was a key part of Nigeria’s climate change negotiations from 1991 to 2018.

He led Nigeria’s technical delegations to the climate change negotiations since their inception in 1991 which produced the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol to the UNFCCC.

Barkindo was the only Nigerian delegate to attend all 15 Conferences of the Parties to the UNFCCC from COP1 in Berlin in 1995 to COP15 in Copenhagen in 2010. In 2002, he served as Coordinator, Group of 77 and China at UNFCCC and was elected Vice-President of the Conference of the Parties at COP13 of the UNFCCC in Bali, Indonesia, in December 2007.

He was re-elected Vice-President at COP14 in Poznan, Poland, in December 2008 and again at COP15 in Copenhagen, Denmark, in December 2009.

Barkindo participated at the UNFCCC COP 22 (Marrakesh 2016), COP 23 (Bonn 2017) and COP 24 (Katowice 2018).

He took part and headlined discussions on energy transition in Africa, its legal framework and issues in-between. Last year he led the conversation on the Petroleum Industry Act, energy transition and the future of Nigeria’s oil and gas.

Barkindo’s time at OPEC was not all rosy. In fact, experts say the turbulence the industry witnessed in the past six months seems to be its worst in modern history.

The 2014-2016 oil price crash

The 2014-2016 collapse in oil prices was driven by a growing supply glut. However, experts say it failed to deliver the boost to global growth that many had expected.

There were expectations that the low oil prices would come with some benefits, but the expected benefits were significantly muted by what a World Bank analysis of the crisis described as “low responsiveness of economic activity in key oil-importing emerging markets, the effects on U.S. activity of a sharp contraction in energy investment and an abrupt slowdown in key oil exporters.”

Between mid-2014 and early 2016, the global economy faced one of the largest oil price declines in modern history. The 70 per cent price drop during that period was one of the three biggest declines since World War II and the longest lasting since the supply-driven collapse of 1986, analysts say.

Essentially, the initial drop in oil prices from mid-2014 to early 2015 was primarily driven by supply factors, including booming U.S. oil production, receding geopolitical concerns, and shifting OPEC policies, according to the World Bank. However, deteriorating demand prospects played a role as well, particularly from mid-2015 to early 2016. This partly explains why the oil price plunge failed to provide a subsequent boost to global activity, experts say.

Significantly, this crash affected low-income countries, especially those whose economies relied heavily on petro-dollar, like Nigeria. In fact, the crash triggered a recession in Nigeria — the worst it had in decades.

It was at this critical time that Barkindo ascended the coveted seat: August 2016. Though some experts would argue that as of August 2016, the crash had exited its peak, the impact was still very palpable. The industry was still in the woods and in desperate search of an escape route to rebound.

Barkindo was credited with making key decisions which helped stabilise oil prices, the industry and, indeed, the global economy.

He would later recall that handling the crisis led him to consult with others outside the OPEC. “I recall vividly that when I assumed office in the summer of 2016 in Vienna, oil prices had dropped to below $10 per barrel. It was very obvious to me that it was beyond OPEC alone to handle,” he said in the meeting with President Buhari.

The 2020-2021 Covid-19 induced oil price crash

The 2020 Covid-19-induced oil price crash and the market downturn was another major challenge that punctuated Barkindo’s time as the Secretary-General of OPEC.

The impact of the COVID-19 pandemic dealt a huge blow to the industry in 2020, so much that it forced U.S. oil prices to go negative for the first time on record. In a matter of hours on April 20, the May 2020 contract futures price for West Texas Intermediate (WTI) plummeted from $18 a barrel to around -$37 a barrel.

Oil producers were faced with a glut of crude oil so much that many scrambled for space to store the oversupply. Apart from WTI, Brent crude oil prices also plummeted, closing at $9.12 a barrel on April 21, a far cry from the $70 a barrel that crude oil fetched at the beginning of the year.

Beyond the mere outbreak of a disease, there were intrinsic issues the Covid-19 pandemic triggered in the industry and one was an unprecedented demand shock that led to a collapse in prices. Demand for oil plunged as governments around the world imposed sit-at-home orders, travel restrictions and businesses were shut down.

While Covid-19-induced issues triggered the freefall of oil prices, there was another trigger: the oil price war between Saudi Arabia and Russia. This war was initiated in March of the year after the two countries failed to agree on oil production levels and it lasted for a month.

It was at this point the intervention and sacrifice of OPEC and its allies proved golden: a production cut of 9.7 million barrels per day for an initial period of two months, starting on May 1, was agreed upon. Analysts at Investopedia say this represented the single largest output cut in history. Oil production would be limited to 7.7 million barrels per day starting on July 1 and running through December 31, 2020.

Amidst the cheers that followed, there was a regret: experts say OPEC’s failure to quickly cut oil production earlier than it did added to the volatility and price declines that the oil industry experienced during the early part of the year.

Also, the OPEC agreement to reduce production levels was not the magic wand, after all: crude oil prices reached some of their lowest levels in more than 20 years by May 2020.

It was, indeed, not the best time to hold such a high-ranking position in OPEC, as Barkindo did.

At a recent oil and gas summit in Abuja, which eventually became the last he attended, Barkindo decried the consistency of challenges that the industry had had to grapple with.

“In a very short time span, the industry has been hit by two major cycles – the severe market downturn in 2015 and 2016, and the even more far-reaching impact of the COVID-19 pandemic,” he said in an address at the summit.

He further said at the summit that the oil and gas industry is “under siege” and still wobbling from the enormous investment losses of recent years.

While achievements during his time could be contested, many would agree really well on his qualifications: BSc (Hons) in Political Science, Ahmadu Bello University, Zaria; Post Graduate Diploma in Petroleum Economics, Oxford, United Kingdom; MBA in Finance and Banking, Washington University, United States; Fellow, George Mason University, Fairfax VA, US.

About 40 years at OPEC is no small feat much more almost six years as the Secretary-General. Though he did not witness the best of times at OPEC, Barkindo is respected as one of the strongest hands Nigeria offered OPEC. And his colleagues at OPEC attest to that.

“Barkindo was a visionary leader and an eloquent communicator who played a key role in forming the historic Declaration of Cooperation at the end of 2016”, the organization wrote in a farewell note.

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