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An Avenue of Dialogue for Global Energy Security

4 April 2007

Paris, France

My 'new avenue' in this first Oil Summit session on 'New Co-operation Avenues' is the broadening and deepening of an existing one - producer-consumer dialogue. At a time, when Energy Security continues to top the political agenda worldwide. For energy importing as well as exporting countries, for industrialized as well as developing economies.

Our time of heightened energy concern is also a time of uncertainties that are prompting some countries and groups of countries to re-think fundamental energy policies. And the policy tuning of one country to meet new challenges and to reduce its particular energy uncertainties can in itself exacerbate existing uncertainties or create new ones for others. Not least considering the interrelationship between energy, environment and economic development. As well as the links between energy and geopolitics. Producer-consumer dialogue acquires increasing importance as nations revisit and modify established policies, and embark on 'New Avenues of Co-operation', in their quest for energy security in a globalizing world of increasing interdependencies.

Amid these uncertainties, there is a fundamental certainty. The world will need more and cleaner energy, used in a more efficient way, accessible and affordable to a larger share of its population. The economic challenge will be to mobilize the substantial amount of new investments needed in the energy sector in competition for funds with other important sectors of the economy. The political challenge lies in operationalizing the energy imperative in a fair and sustainable way. Through national policies as well as in bilateral, regional and wider global co-operation. The energy industry itself has a crucial role to play in this effort. Doing the actual work. Finding, producing and bringing energy to the consumer.

From Confrontation to Dialogue

Happily, avenues for enhanced dialogue are in place. That has not always been the case. Indeed, the past has shown how energy, especially the strategic commodity oil and market volatility, could impact domestic economic development. And also how it could create conflict or increase political tensions between countries and groups of countries. An image of confrontation had developed between producers and consumers of petroleum. OPEC and the IEA emerged as the bi-polar and multilateral expression of conflicting producer-consumer interests. These confrontational images of the past are behind us. And should remain there.

The producer-consumer dialogue at political level in the International Energy Forum that started here in Paris 16 years ago focuses on energy security and the links between energy, environment and economic development. The informal exchanges of policy views among Ministers transcend traditional political, economic and energy policy dividing lines. The IEF gathers under one global umbrella Ministers not only of the petroleum exporting countries of OPEC as well as Ministers of the industrialized, energy importing countries in the IEA. It also gathers Ministers of countries outside these organisations, such as China, Russia, India, Brazil, South Africa and others, that will increasingly impact the global scenario. The results of producer-consumer dialogue can be seen in policy actions of individual countries as well as in statements of policy intent that send calming signals to nervous energy markets.

Later this month, representatives of an Informal Support Group of Countries will meet at our Headquarters in Riyadh to develop themes for the 11th Ministerial in Rome next year. They do so as the producer-consumer dialogue is evolving against a complex backdrop, some elements of which are:

  • Fossil fuels remaining paramount for quite some time with increasing attention to development of alternatives.
  • Increasing energy demand, efficiency and trade.
  • Increasing competition for energy resources and increasing competition among energy resources.
  • Resource nationalism. Nations wanting to make the most of their endowment for the benefit of their people.
  • New avenues of co-operation between IOCs and NOCs
  • Countries embarking on avenues of energy interdependence or energy independence for energy security?
  • Environmental concern. Catastrophe or environmentally benign technological breakthroughs?
  • Vulnerability of energy production and supply to politically motivated disruption, terrorist onslaught, technical mishap and forces of nature.
  • Call for good governance and transparency. People expect their Governments to provide sufficient, reliable and affordable energy.
  • Energy poverty. Demands for equitable access to energy for the quarter of the world's population who do not have it, but who want it and need it for a better life tomorrow.
  • The shift to Asia of global economic gravity with geopolitical and energy implications.
  • And, I hope, increasing awareness of long-term communality of interests among producers and consumers.

Shared responsibility

The IEF Ministerial in Rome will further refine shared perspectives identified in previous political level discussions. Not least at the 10th IEF Ministerial in Doha in April last year, where Ministers discussed energy security as 'shared responsibility'. They also interacted with CEOs of leading national and international energy companies in the 2nd International Energy Business Forum.

Ministers noted in Doha that world economic growth had remained strong despite increasing oil prices and market volatility, but they expressed concern over effects of sustained high price levels on the world economy, and especially on developing countries. They confirmed their shared interest in reduced market volatility and prices at reasonable levels for both consumers and producers. They attributed higher oil prices to a number of factors, including increasing demand, tight up- and down-stream capacities, intervention of non-industrial actors and geo-political developments, which contribute to increased anxiety in the market.

Ministers underlined the importance of strengthening dialogue and co-operation not only between governments, but also between governments and industry with a view ensuring reliability, security and affordability of energy. They called for a stepping up of investments across the energy chain to meet the substantial increase in demand required for global economic growth and social development in the years ahead.

Acknowledging that the world will continue to rely strongly on ample supplies of fossil fuels, Ministers underlined the need to accelerate the development of cleaner fossil fuel technologies along with alternative sources of energy and to increase energy efficiency.

Ministers underscored that improved access to markets, resources, technology and financial services, bolstered by fair and transparent economic fiscal and legal regulatory frameworks, and by good governance, is crucial for the long-term energy security of both consumers and producers. They also acknowledged the need to do something about the shortage of skilled human resources throughout the industry.

The need for dialogue and co-operation on issues of energy security was given additional forceful emphasis also by the G8 Heads of Government at their annual Summit under the Presidency of the Russian Federation last year. They underscored at the very top of their St. Petersburg Plan of Action on Global Energy Security the importance of the global energy dialogue at the level of Ministers in the IEF.

Energy Security and Interdependence

We are all 'addicted to energy'. Not as an end in itself. But as a means to promote economic and social development. Energy goes to the very core of national interests. But it is also a global issue in an increasingly interdependent and multi-polar energy world.

Some would argue that dependency on others in so important and strategic an area as energy constitutes a political and economic risk that should be reduced to a minimum, if it cannot be avoided altogether. Others would argue that energy dependency is not only practical and inevitable in a globalizing world, but that it ties countries closer together also economically and can serve as an impulse to improve relations between countries and the overall geopolitical climate. Energy interdependence can be good. But energy interdependence can also be bad. For it to be good and sustainable, it has to be mutually beneficial - 'win-win'.

The political level dialogue in the IEF highlights both sides of the energy security coin. Security of supply and security of demand. There is a call for 'road-maps' for both.

A Multi-polar Energy World

Energy security in its more holistic, global and long-term perspective is the focus theme of the 15th Session of the United Nations Commission on Sustainable Development in May this year. Because of the importance of energy in meeting the Millennium Development Goals. As global focus now is being put on issues of energy security, many countries are diversifying their energy markets or sources of energy supply in a network of bilateral solutions. But also multilateral regional co-operation is being strengthened around the world, in Asia, Africa, Europe and in North as well as South America. We see new avenues of co-operation also between regions. The Secretariat is facilitating and interacting with some of them.

Not least the process of Asian Ministerial Roundtables initiated by India two years ago. The Minister of Petroleum and Mineral Resources of Saudi Arabia, H.E. Ali Al-Naimi, and the Minister of Economy, Trade and Industry of Japan, H.E. Akira Amari, will next month convene at IEF Secretariat Headquarters a meeting of Ministers of the principal petroleum-importing countries of East Asia and Ministers of the petroleum-exporting countries of West Asia (the Gulf). Ministers representing half of the World's population, the bulk of the World's remaining proven oil and gas reserves and, very importantly, the greater part of the surging global energy demand expected in the decades ahead. Regional Asian developments will have greater and greater bearing on global energy security.

Regional and inter-regional co-operation can provide stepping-stones to global approaches and co-operation. Indeed, the IEF acquires added importance as a global meeting point for the mosaic of bilateral, regional and inter-regional energy ambition and co-operative designs.

JODI - A unique transparency initiative

Better data and more transparency can improve market predictability and promote the investments required to enhance energy security. IEF Ministers reaffirmed at the Doha IEF support of the Joint Oil Data Initiative - JODI for short. They envisaged the initiative being expanded to include also other sources of energy that are important in the world energy mix. The importance of better data and JODI for energy security was subsequently echoed by the G8 Heads of Government in their St. Petersburg Plan of Action.

JODI is a concrete outcome of the producer-consumer dialogue. Co-ordination of this unique inter-organisational transparency initiative, supported by the IEA and OPEC, APEC, Eurostat, OLADE and the UN, is a flagship Secretariat activity. More than 90 countries, representing more than 90% of global supply and demand, are now submitting data on production, demand and stocks through their organisations. We rely on the submission of timely and accurate data by participating countries.

The Road to Rome

As we embark on a broadened and deepened producer-consumer dialogue as a 'New Avenue of Co-operation', increasing the awareness of common interests and providing co-operative input for national decision-making, on our road to the IEF Ministerial in Rome and beyond, I hope to see myriad new partnerships between governments and between governments and industry. Innovative ways to realize win-win opportunity. And, hopefully, a code of global energy conduct that is reasonable and advantageous for all to follow. And where driving off the 'Avenue' in pursuit of short-term advantage at the expense of others, would be tantamount to damaging the car while shooting oneself in the foot, at the very least.