Mexico is honored to host the 12th International Energy Forum and 4th International Energy Business Forum. We especially thank our co-hosts Germany and Kuwait, as well as the IEF Secretariat, whose help has been invaluable in organizing these events. We hope that the work conducted in Cancun will bear fruit and that it helps in setting a comprehensive platform to strengthen the global energy dialogue, in order to further our understanding of the myriad challenges confronting the energy sector.
The global financial crisis and the ensuing economic slowdown, coupled with the roller-coaster ride in oil prices that, at their height, were five times those of 2004, have created a unique set of risks for the energy sector. As a result of reduced cash flow, leading companies in the global oil and gas sector have announced cutbacks in capital spending, as well as over a hundred project delays and cancellations. According to estimates by the International Energy Agency, these decisions cut 2009 global upstream oil and gas investment budgets by 19% compared with 2008 – a reduction of $ 90 billion dollars. If prolonged, such downturn in investment threatens to constrain capacity growth in the medium term, particularly for long lead-time projects. This will eventually pose a risk of supply shortfalls. The Organisation of the Petroleum Exporting Countries has already projected that this downturn will mean that crude runs will not recover to 2007 levels until 2015. As a consequence, low refinery utilization and poor refining economics will besiege the sector for an extended period of time.
Complicating this scenario, for a large segment of the world population access to energy remains a promise yet unfulfilled, while the relationship between energy and climate change has become increasingly intricate. Currently 2.5 billion people lack access to modern fuels for cooking and heating, and given concurring estimates by leading aid agencies, under current policies that number will increase to 2.6 billion by 2020… more than one third of the world’s population. Furthermore, according to the Organisation for Economic Cooperation and Development, the climate change picture remains bleak: the atmosphere contains long-lived greenhouse gases at a concentration 455 per million of carbon dioxide equivalent, which is 60% above preindustrial era levels. This number far exceeds the natural range over the last 650,000 years. Average global temperatures are currently 0.76°C higher than pre-industrial levels and continue rising.
Considering this situation, it is not surprising that the international dialogue between producing and consuming countries has been very intense in the past few years; and that it has expanded to address energy security, the dilemmas of energy poverty, and the global concern for sustainability and environmental protection. All of these subjects will be open for discussion when we meet in Cancun.
I think it is fair to say that no Minister participating in this coming Meeting can ignore the crossroads we now face, nor can any of us shirk the responsibilities we share. In order to promote coordinated confidence-building measures, we must discuss how to build a more focused producer-consumer dialogue, based on a greater degree of trust and openness. Our list of priorities is extensive: identifying the causes and consequences of price spikes, assessing the uncertainties affecting future supply and demand outlooks, unlocking the barriers holding back investment, encouraging increased cooperation and partnership among national and international companies, broadening energy access, and advancing clean technologies.
This International Energy Forum provides the occasion and structure to substantially strengthen the architecture of the global energy dialogue. Enhancing awareness of the links that need to be established between governments, international financing bodies, corporations, and assistance agencies is equally crucial. In an important sense, most people involved in the energy sector agree that we are running against the clock in terms of energy poverty and climate change, as well as with regards to the remaining avenues available to us if we are to successfully turn the tide.
Given our sector’s makeup, it may be more than a little ironic to cast the challenge before in these words, but symbolically speaking we are in a struggle pitting light against darkness. The sheer scale of this mandate is monumental, and it can only be met through a broad-minded, collaborative effort across the globe. This effort must encompass each level of government, and all possible partners in the industry, financial, and aid communities, all striving together to uncover, fund, and deploy new measures to lead the way into a prosperous future.
We look forward to welcoming you in Cancun!