President Putin and the other G8 Heads of Government expressed concern about high and volatile oil prices in their statement on the Global Economy and Oil at the Gleneagles' Summit this summer. They emphasized the importance of the global dialogue on energy between Ministers of oil producing and oil consuming countries in the International Energy Forum.
The G8 Heads of Government underscored the need for investments in energy infrastructure as well as the need for increased transparency and reliable data on oil supply, demand and stocks. They expressed their support of the Joint Oil Data Initiative, which the Secretariat of the IEF is now co-ordinating with the support of the IEA, OPEC and other international energy organizations. This international and inter-organizational initiative is contributing to better data and increased transparency in the oil market.
Following the G8 Summit, several other international and regional organizations, such as the EU, APEC, OPEC, IMF and G20 have echoed from high political level the importance of the producer-consumer dialogue in the IEF in efforts to reduce present volatility in the oil market.
A defining issue
Oil markets and energy security are indeed in the headlines and at the top of the international political agenda. Oil importing, industrialized countries warn of the detrimental effects that sustained, high oil prices have on the world economy. Oil-importing developing countries are suffering even more than before from increasing oil import bills. Oil-exporting countries are producing what they can to help bring prices down. And making good money doing so.
There are several factors behind the higher level of oil prices and the volatility that we have today. Surging demand in Asia, economic recovery, bottlenecks throughout the supply chain, speculative activity and expectations of future tightness as well as terrorist attacks and political uncertainties, and lately also destructive forces of nature.
The shorter-term perspective is a formidable challenge for governments and industry. The longer-term scenario is even more daunting. The increase in global energy demand foreseen in the years ahead is substantial. An add-on of two-thirds of today's level by the year 2030. Most of this increase will come in the developing countries as their economies grow. It is estimated that total investments of USD 16 trillion are required for the energy supply infrastructure needed to satisfy global demand the next twenty-five years.
Indeed, energy is a defining global issue in this new Millennium. The world will need more and cleaner energy used in a more efficient and sustainable way. Accessible and affordable to a larger share of the world's population. Clearly, this is a time to join hands in global dialogue and partnership to promote share interests in a world of increasing interdependencies.
And what better place to reflect on 'Sustainable Development of World Energy' than here in Moscow? At a time, when the Russian Federation, with her enormous energy resources, towers as a super producer, consumer and exporter of oil and gas. And on the eve of Russia assuming the Presidency of the G8 next year and the focus on energy security that your Presidency will bring.
Let me against this backdrop commend the organisers of the 5th Russian Oil and Gas Week on their success in bringing representatives of governments and industry together in purposeful dialogue at a very important point in time.
A unique dialogue on energy
We need dialogue and partnerships for a number of reasons. 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. It is difficult, indeed, to imagine an area, where nations are more interdependent than in the confluence of energy, environment and economic development.
The producer-consumer dialogue at political level in the International Energy Forum is unique in its global participation and perspective across traditional geo-political, economic and energy policy dividing lines between nations. It involves not only ministers of IEA and OPEC countries, but also ministers of important countries outside these two main producer and consumer organizations; Russia, China, India, Brazil and South Africa to name a few, that will increasingly impact the global energy scenario.
In the IEF, Ministers focus on energy security as well as the links between energy, environment and economic development. The series of Ministerial meetings that started in 1991 has contributed to a convergence of views. Growing awareness of interdependence, mutual vulnerability and of 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 than before when producer-consumer relations evoked images of confrontation.
'Energy Security' is the theme for Russia's forthcoming G8 presidency. It is also the theme of the 10th IEF that will take place in Doha, Qatar on 22-24 April 2006. We are looking forward to Minister Khristenko and other G8 energy ministers bringing their important perspectives to the IEF Ministerial in dialogue with ministers from an additional 50 energy producing and consuming, industrialised and developing, countries. The 2nd International Energy Business Forum will then also take place and give CEOs of leading companies and Ministers an opportunity to interact.
The importance of investments for energy security was highlighted at the IEF Ministerial in Amsterdam last year. Ministers advocated unhindered access to capital, energy technology and markets for development of production, transit and transport capacity. They reaffirmed the sovereign rights of states over their natural resources, while also recognising the commercial objectives of oil and gas companies. Ministers echoed the strong messages from industry that stable and transparent economic, fiscal and legal frameworks need to be in place to attract sufficient foreign investment.
At the 10th IEF next year, Ministers may, against the backdrop of present energy security concerns, want to take a closer look at constraints in the market and at what potential policy frameworks that would enhance efficient market operation. What can governments and business sector do to meet increasing energy demand and deal with excessive volatility in the market? What are the constraints and bottlenecks throughout the energy chain? The crucial issue of investments, the main theme of the last IEF, merits the on going attention of Ministers in their overall quest for energy security. As do the broader issues with regard to the links between energy, environment and economic development.
Riyadh Meeting of Ministers
An upcoming stepping stone to Doha will be the meeting of key energy ministers that the Minister of Petroleum and Mineral Resources of Saudi Arabia will host in Riyadh on 19 November on occasion of King Abdullah inaugurating the IEF Secretariat's new headquarter premises. Russia is one of the important countries invited. This meeting of Ministers of important oil producing and consuming countries comes at a time of special international attention to developments in the oil market.
The inaugural event will also see the public release of the Joint Oil Data Initiative's World database that is managed by the IEF Secretariat. More than 90 countries, representing 95% of global supply and demand, are now submitting data. I am happy to note that also Russia is contributing timely and accurate data on production, demand and stocks.
Russia in the IEF
Russia is taking active part in the International Energy Forum as an important member of the Secretariat's Executive Board. Russia has a very special role to play in international energy co-operation. Russian oil exports, the second largest in the world, and gas exports, the largest in the world, are a substantial contribution to the energy security of others. The foreign exchange that you earn from these exports fuel your domestic economic development. This interdependence in energy can also strengthen your wider economic and political relations with importing countries.
Minister Khristenko has just presented to us Russia's impressive network of energy co-operation and diplomacy, bilaterally and regionally, with other countries as well as with international organizations. He underlined the importance of the dialogue within the G8 and in particular Russia's dialogues with the EU and USA as well as with major oil and gas importing countries to the East in Asia.
Dialogue can lubricate
The global energy dialogue is definitely also about such regional and inter-regional dialogues. At last year's Russian Oil and Gas Week, the IEF Secretariat and Russian energy authorities held a joint session on Eurasian energy co-operation. Parallel lanes of global and regional co-operation are important to energy security in a multi-polar energy world. Regional approaches and solutions can be stepping-stones to subsequent global solutions. The Secretariat can serve as a catalyst link between inter- and intra-regional dialogues on the one hand and the global dialogue in the IEF on the other. One important such endeavour was the 'Roundtable of Asian Ministers on Regional Co-operation in the Oil and Gas Economy' that India's Petroleum Minister hosted in New Delhi in association with the Secretariat in January this year.
Dialogue can 'lubricate' international energy relations so that they run smoothly without hick-ups and conflict. A smoothly operating energy world is crucial for sustainable development of the global economy and co-operative political relations between countries. Governments and industry need each other and are joining hands in partnerships. Political level dialogue is important for the development of conducive frameworks for commercial ventures.
The Russian Oil and Gas Week has become an important international forum for interaction between stakeholders. As no doubt also this 5th Russian Oil and Gas Week, and those to follow, will confirm.