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Co-Operation between Producers and Consumers - The Role of the International Energy Forum

16 September 2004

Vienna, Austria

We live in an interdependent world. Interdependence among nations across geographical borders. Interdependence across political, cultural and economic dividing lines. It is there for all to see and feel. And it is here to stay. Interdependence is a mantra of our day and age.

It is difficult to imagine an area, where nations are more interdependent than in the confluence of energy, environment and economic development. It is good that nations realise their growing interdependence. It is even better when they acknowledge this in public statements. And it is best when they join hands and do something about it. 

Our Seminar theme 'Petroleum in an Interdependent World' is a core issue as we find energy security again at the top of the international political agenda. Government leaders are concerned. Not only in a short-term crisis perspective, but also in the long-term perspective as production and consumption patterns, as well as investment requirements, evolve in a changing geopolitical environment. 

The reason is obvious. Energy is crucial for economic and social development in individual countries. Energy is important for commercial and political relations between countries. It fuels the world economy. Production and consumption of energy impacts the global environment. Energy influences, and is influenced by, international politics. 

International Energy Forum

Let me thank OPEC for this opportunity to share some perspectives on co-operation between producers and consumers in this session on Energy Security. From the vantage point of a new international secretariat headquartered in Saudi Arabia. The mission of this 'New Kid on the Global Energy Block' is to facilitate on a continuous basis the informal dialogue at the level Ministers in the International Energy Forum. A dialogue of the interdependent, focused on security of energy supply and demand, as well as on the links between energy, environment and economic development. 

Energy is a matter of supreme national interest. In their national interest, some oil-exporting countries have joined together in OPEC. In their national interest, some industrialised, oil-importing countries have joined together in the IEA. The IEF is the institutional endeavour of not only IEA and OPEC countries, but also of the large number of energy producing and consuming countries outside these organisations. Joining together in a global energy dialogue at the level of ministers and across traditional dividing lines. A dialogue to promote the national energy security of all, thereby serving the long-term common interest as well.

In that spirit, many of the Ministers speaking at this OPEC Seminar attended the 9th IEF Ministerial that took place in Amsterdam 22-24 May. They exchanged views on energy challenges ahead, especially those related to investments. 63 countries and eleven international organisations participated. Never before had so many energy ministers attended a single energy gathering. 

Dialogue of the Interdependent

The past has shown how energy, especially the strategic commodity oil, and market volatility, can create conflict or exacerbate political tensions between countries or groups of countries. For many years, it was politically not on for energy ministers from consuming and producing countries to meet in a multilateral context. Happily, it now is. 

The informal producer-consumer dialogue in the IEF at political level started in Paris in 1991 and broke the ice. The series of IEF Ministerials have contributed to greater mutual understanding and to convergence of views. Greater stability and predictability in market developments, and energy prices at a reasonable level, are shared goals. The shared sense of interdependence, vulnerability and win-win opportunity has improved the atmosphere for long-term co-operation. And difficult short-term issues are being addressed in a more co-operative way. 

Unique in scope and approach

The producer-consumer dialogue at political level in the IEF is unique in its global participation and perspective. I have mentioned that it involves not only ministers of IEA and OPEC countries, but also ministers of important countries outside these two main producer and consumer organisations; China, Russia, India, Brazil and South Africa, to name a few, that are increasingly impacting the global energy scenario. In the IEF, these and other countries make their voices heard on an equal footing with their peers in the IEA and OPEC. 

The IEF is unique also in approach. Ministers discuss common concerns. They present their policy views and listen to those of others. Together, they look for consensus-oriented approaches to the energy challenges ahead. The IEF is not a decision-making organisation. Nor do ministers negotiate legally binding settlements and collective action there. Decisions are made in capitals. 

Amsterdam Conclusions

Let me highlight some shared perspectives that emerged from the Amsterdam Ministerial in May, shared perspectives that national policies will relate to. 

Ministers expressed concern about the high oil prices. Unanticipated strong demand, tight capacities up- and downstream as well as geopolitical uncertainties were seen as drivers. Economic recovery worldwide, especially in developing countries, would benefit from stable oil prices at a reasonable level. Both producer and consumer countries should take action to ensure sustainable price levels.

Ministers considered present oil and gas reserves sufficient to meet the world's increasing energy needs, provided that necessary investments are made in time. 

Unhindered access to capital, energy technology and markets would promote the development of production, transit and transport capacity. The sovereign rights of states over their natural resources were reaffirmed. The commercial objectives of oil and gas companies were recognised.

Ministers echoed the strong message from CEOs of leading energy companies in the preceding International Energy Business Forum that stable and transparent economic, fiscal and legal frameworks need to be in place to attract sufficient foreign direct investment and other resources. Bilateral and multilateral investment agreements could help clarify conditions and thus facilitate the mobilization of investments. Transparency also with respect to oil production and stocks was seen as important to that end. 

Ministers underscored the importance of investments in cleaner fossil fuels and of reducing the detrimental effects of growing energy use. The importance of developing alternative energy sources was stressed. Their vision was a smooth transition to a new energy era for the longer term, facilitated by the presence of still ample oil and gas reserves.

The importance of energy for sustainable development and follow-up of the Johannesburg Summit was also emphasized, especially bearing in mind the energy needs of a growing world population.

Energy Security

Energy security is a complex and broad-based issue. It is more than petroleum. And it is more than technical arrangements and infrastructure. It also has to do with economics, politics and the environment. Access to affordable energy for the World's poor is part of the equation. Energy security has domestic and foreign policy implications. Security of supply and security of demand translate into producer-consumer interdependence. 

The importance of investments for energy security was highlighted at the IEF Ministerial. The economic challenge is to mobilise necessary investments in competition with other important demands of society. The political challenge is to ensure a common energy future where energy supply and demand are balanced in such a way as to promote long-term, sustainable development. The world will need more and cleaner energy used in a more efficient way. Accessible and affordable to a larger share of the world's population. 

In this picture, energy trade, almost entirely in fossil fuels, is set to expand rapidly. It will increase producer-consumer interdependence and pose new challenges. Vulnerability to disruptions of energy supply, due to politically motivated sabotage or technical mishap, can increase. Maintaining the security of international sea-lanes and pipelines on- and offshore assumes increasing importance for energy security.

There is no quick and lasting fix to the challenge of energy security. It requires a continuous dialogue between governments and it requires dialogue and partnerships between governments and industry. 

New Kid on the Global Energy Block

A cardinal task for the new International Energy Forum Secretariat in Riyadh is to support host country Qatar, and co-hosts China and Italy, in preparing the next Ministerial that will take place in Doha in 2006. The Secretariat will help to ensure the continuity of the ministerial level energy dialogue also between the biannual meetings by organising supportive meetings and roundtables. 

We are following up proposals from Ministers to facilitate regional or inter-regional meetings with a view to deepening the global dialogue. The Secretariat can play a catalyst role in linking regional and inter-regional activities to the global dialogue endeavour in preparation for the Doha Ministerial. 

Let me mention some activities on our planning horizon. The Petroleum Minister of India has already highlighted one in his important and forceful statement. We will assist India in hosting later this year a roundtable of the principal Asian oil-importing countries and the principal Middle East oil-exporters countries. The Energy Ministers of ASEAN, China, Japan and Korea have requested us to facilitate corresponding meeting with a larger group of Middle-East exporters next year. Interdependence between these two regions will assume increasing importance for the global dialogue as Asian energy demand surges in the years ahead, affecting the global market scenario as well. 

Next month, at the request of the Energy Minister of Russia, we will assist in a roundtable on Eurasian energy co-operation. We will work with Mexico, the next host of AFROLAC, the Conference of Energy Ministers of Africa, Latin America and the Caribbean, on a preparatory interregional roundtable of these countries next year. And we will contribute to the focus that the UN system will put on energy and development in 2006-2007, following up the Johannesburg Summit, as mentioned by Ambassador Figueredo on behalf of the UN earlier today. 

The Secretariat will also contribute to enhanced oil data collection and transparency. We are now discussing with six organisations - APEC, Eurostat, IEA, OLADE, OPEC and the UN - what role we might play in co-ordinating the Joint Oil Data Initiative (JODI) that they have developed, as mentioned by Executive Director Mandil of the IEA yesterday. 

In conclusion

The International Energy Forum is an evolving international endeavour driven by governments at ministerial level. It provides a venue for ministers of energy exporting and importing countries, of developing and industrialised countries, to put their concerns on the table and to better understand those of others. A venue where Ministers, in on-going and informal global dialogue, can identify effective and sustainable ways of promoting energy security and stability in our Interdependent World.