Jodi shines light on the oil market
Everyone likes transparency, but not everyone likes to share data. The IEF is still convinced its Jodi database is the answer
AT A conference sixteen years ago in Riyadh, the International Energy Forum (IEF) came up with a plan. Better data, it hoped, would bring transparency to global oil markets and reduce volatility in prices. The International Energy Agency, Opec, Eurostat and others all agreed, pledging to get their member countries to hand over production, consumption, imports and stocks data - all to be collected in a single publication. By 2002, the Joint Oil Data Initiative (Jodi) was up and running, and 70 countries had joined.
The idea was faultless. More transparency in energy markets - Jodi began reporting gas statistics in 2014 - would provide more predictability to consumers and producers alike; and, in theory, make investment decisions easier.
In practice, though, Jodi is a thankless and often Sisyphean task for Fuad al-Zayer and Yuichiro Torikata, two IEF analysts who collect and publish the initiative's oil-market data.
The first obstacle is getting countries to hand over any data at all. Only a third of the 180 countries which have been involved with Jodi “consistently” send in their numbers, says Torikata. Stalwarts include Spain, Venezuela, Russia, Saudi Arabia and the UK.
But the data published on Jodi's website, going back to 2002, show many countries cough up their statistics only sporadically, if at all. Gabon and Syria, for example, have never provided data, and Armenia only started to last year. At the time of writing, it still hadn't provided anything for November 2015.
Indonesia and Libya - which both have capacity to sway markets with their output numbers - haven't provided any production or demand statistics since 2014. Gambia and Belarus - admittedly less crucial to global markets - have both supplied data, but only for that year.
Mining for data
The IEF says one reason for this is that some countries simply don't have a system for collecting data and reporting it. At least that's a problem that could eventually be fixed. But some countries won't report their data because they deem it confidential; or their national oil companies fear the intelligence will give competitors an advantage.
“Certain countries, because of their oil regulations, don't publish certain flows. China doesn't publish stock levels, nor do Saudi Arabia or India,” says al-Zayer. “We know these issues exist and we work with the country directly, doing things to encourage openness such as having workshops in places like China.”
That's significant for the oil market. The pace of China's stock building in recent years has been a critical issue for traders and those trying to get a true picture of Chinese consumption levels. So progress would be welcome. By contrast, the US government publishes weekly estimates of both commercial and strategic stock levels.
”Each step has a verification process. Each country has a different confidentiality agreement and delivers the data in a different way,” says Torikata. “What we do is not about providing estimates. We just publish the raw data and then people make assumptions from it.”Al Zayer says that when they suspect data provided by a country aren't correct, Jodi will still publish the numbers - but with a disclaimer telling users to treat the information with caution.Then there's the quality of the data. Even when the information is forthcoming, sometimes the IEF suspects it is not accurate. But verification is difficult. “We are given misinformation sometimes with specific products,” Torikata says. “Russia doesn't like publishing its kerosene data because it says it's confidential.”
Still, Torikata says that despite the IEF's best efforts to verify the data, Jodi users are “very critical” of its accuracy. It raises a crucial question about the whole endeavor. If the data are incomplete, untimely or inaccurate, what is the point of collecting them at all?
“It's a work in progress. It always will be,” al-Zayer says. “It's not about the data itself, it's about the sharing attitude among countries and the commitment to work together.”
The IEF says the main aim of Jodi is not to build a database, but to raise awareness among oil-market players about the need for more transparency in the data.
Nonetheless, they have one tactic up their sleeve to try to coerce cooperation. Torikata and Al-Zayer say they've adopted a “name-and-shame” approach at conferences to put pressure on countries to hand over data. “Sometimes we apply political pressure. In the case of China, it is part of the G20 and we attend meetings as well,” al-Zayer says. “We report which G20 countries offer full, partial or no information. At the same time, we work with technical staff and try to train them. We've come a long way but there are certain flows missing which the world needs.”
The IEF is lobbying hard to improve things by teaching people how to collect and report the data. The incentive for member countries is to be seen as transparent and cooperative - a perception that can only help give faith to investors and trading partners.
“If you talk to people about providing data, nobody cares,” Torikata says. “But if you talk to people about transparency, everybody wants to be seen to be transparent.”