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Global Energy Security - A Shared Responsibility

28 June 2005

Geneva, Switzerland

The United Nations Economic Commission for Europe is putting timely focus on the Caspian Region at this High-Level Energy Security Forum. Caspian energy goes to the core of the broader focus that the UNECE is putting on the Eurasian Space this week at the 14th Annual Session of its Committee on Sustainable Energy. Caspian and wider Eurasian developments are assuming increasing importance in the global energy security context. I am happy for this opportunity to present the International Energy Forum and its endeavours to promote global dialogue on energy. Your presentations and discussions today give very relevant input to our preparations for the 10th IEF Ministerial that will take place in Doha, Qatar in April next year and where your ECE energy ministers will discuss energy security with key colleagues from other regions of the world.

Indeed, energy security is again at the top of the international political and economic agenda. Government leaders are concerned. Because of the importance that energy has for economic and social developments in their individual countries, for relations between countries, for the world economy and the environment. It is difficult, indeed, to imagine an area, where nations are more interdependent than in the confluence of energy, environment and economic development.

Oil importing, industrialized countries warn of the detrimental impact that sustained, high oil prices have on their individual economies and on the world economy. Oil-importing developing countries suffer 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. Surging demand in Asia, economic recovery, refinery bottlenecks, tight production capacity, as well as terrorist attacks and political uncertainties are driving factors behind the higher oil prices that we have today.

If this shorter-term perspective is challenging, the longer-term scenario is even more daunting. The increase in global energy demand foreseen in the years ahead is substantial. Most of this increase will come in the developing countries as they industrialize and their economies grow. In this longer-term perspective, production and consumption patterns, the energy mix as well as investment requirements, will evolve in, and influence, a changing geopolitical environment. 

Energy Security

Energy security is a complex and broad-based issue. It is about oil, diversification of supplies and energy mix. It is about investments, technical arrangements and infrastructure. It also has to do with overarching imperatives of economy, politics and the environment. Energy security has domestic and foreign policy implications. It translates into producer-consumer interdependence, where mutual vulnerability and win-win opportunity is the name of the game, short term and long term.

Nowhere could this be truer than in the Eurasian Space with ample reserves of oil and gas at its Caspian heart. With energy hungry economies in Asia to the East and in Europe to the West.

Global energy trade, almost entirely in fossil fuels, is set to expand rapidly. Inter- and intra-regional trade in oil can double in the next 25 years. The mismatch between where these sources of energy are produced and where they are used will increase, linking regions and sub-regions closer together, but also posing 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 will assume increasing importance for energy security.

There is no quick and lasting fix to the challenge of global energy security. The cluster of energy security issues must be addressed in on-going dialogue not only between nations at political level, regionally and globally, but also in dialogue and partnerships between governments and industry. 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.

The International Energy Forum

The International Energy Forum gathers Energy Ministers of the industrialized economies of the IEA, the petroleum exporting countries of OPEC, and, very importantly, also of countries outside these two main producer and consumer organizations, countries such as Russia, China and India that will increasingly impact the global energy scenario. In the IEF, Ministers exchange policy views and look for consensus-oriented approaches to energy challenges ahead, across traditional economic, political and energy dividing lines.

The IEF is not a decision-making organization or a place for negotiating legally binding settlements and collective action. Nor is the IEF a body for multilateral fixing of prices and production levels. Decisions are made on a national basis in capitals.

When ministers last met in Amsterdam in May last year, the 9th IEF Ministerial, they voiced concern about the high oil prices. Prices today are even higher. They agreed that 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 recognized.

Ministers echoed the strong message from CEOs of leading energy companies, whom they interacted with 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. 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 was also emphasized, especially bearing in mind the energy needs of a growing world population. 

Three Pillars of Activity

Ministers established the IEF Secretariat in December 2003, headquartered in Riyadh, to support and enhance their global political level energy dialogue. A cardinal task for the Secretariat in the months ahead is to support host country Qatar, and co-hosts China and Italy, in preparing for the IEF Ministerial next year and subsequently to following up the Ministerial discussions.

Our second pillar of activity is to help ensure the continuity of the ministerial level energy dialogue by facilitating supportive meetings and roundtables also between the biannual IEF Ministerials.

The third pillar of Secretariat activity is to co-ordinate the Joint Oil Data Initiative (JODI) developed by the IEA, OPEC, APEC, Eurostat, OLADE and the UN. Ministers, and industry, have underlined how important enhanced oil data transparency is for market stability and global energy security. More than 90 countries representing 95% of global oil production and demand are now submitting data to JODI. We are planning a public release of the JODI World Database later this year.

Intra- and inter-regional impulse

Now we see a trend also towards closer intra- and inter-regional co-operation in the field of energy. Energy security is a core issue also in such regional and inter-regional dialogues. These can have strong impact also on energy security endeavours in the global dialogue. In fact, Ministers of several countries made specific proposals at the Amsterdam Ministerial for Secretariat facilitation of such regional and inter-regional dialogues as part of our activity leading up to the 10th IEF. The global dialogue is definitely also about regional and inter-regional dialogue in a multi-polar energy world. Regional solutions can be stepping stones towards global solutions. The Secretariat has a catalyst role to play in linking regional and inter-regional activities to the global dialogue in the IEF.

I would like to highlight in this context the 'Roundtable of Asian Ministers on Regional Co-operation in the Oil and Gas Economy' hosted by India in New Delhi in January this year in association with the International Energy Forum Secretariat. The petroleum ministers of the principal East and South Asian importers met with those of the main exporters in 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. This was their first discussion on a regional Asian basis of energy security, stability and sustainability.

Ministers recognised that the Asian oil economy is integral to, and inseparable from, the global oil economy. They shared the desire for market stability and that prices be sustained at levels which encourage Asian consumers to increase their purchases of Asian production on the one hand and encourage Asian producers to promote investments in oil and gas for Asian consumer destinations on the other. They exchanged views on the scope for improving Asian markets and underlined the importance of strategic storage and crisscross investments linking Asian consumers and producers closer together.

Ministers will continue this new regional dialogue with follow up meetings in Saudi Arabia, Japan, and Kuwait. The IEF Secretariat was requested to facilitate their further process as an element in our global dialogue activity. 

The Road to Doha

The theme of the 10th IEF in Doha is 'Fuelling the Future; Energy Security a Shared Responsibility.' Host Country Qatar is inviting Ministers from more than 65 countries for this biannual event. As at previous IEF Ministerials, energy security will also be seen within the broader inter-relationship between energy, environment and economic development.

Qatar has already started preparations for the Ministerial in concert with co-hosts China and Italy, members of the Secretariat's Executive Board and the Secretariat itself. Qatar convened in April a wider Informal Support Group of countries that also will contribute to the selection of themes and topics for the forthcoming Ministerial discussions.

Yesterday, in Vienna, we had consultations with representatives of industry in preparing the 2nd International Energy Business Forum, which will take place in conjunction with the 10th IEF proper. The Business Forum gives an opportunity for unique interaction between CEOs of leading companies and Ministers that will feed into the subsequent deliberations between Ministers. At our preparatory meeting in Vienna, we received valuable industry input to help determine and prioritize the key issues that should be put on the agenda.

At both the IEF and IEBF, we will seek to target issues where common agreement and shared perspectives now are lacking and can be developed through consensus-oriented approaches. These high-level meetings also reconfirm the body of shared perspectives from which the dialogue and co-operation can be further deepened. In addition to their eye towards the mid and longer term, Ministers will, of course, also want to dwell upon the immediate issues of the day when they meet. And time is also set aside for bilateral meetings.

In Doha, Ministers may want to look more specifically at constraints in the market and at what potential policy frameworks that would encourage 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? How do we deal with them?

Topics include: Access to energy. Diversification and efficiency. Transparency. Environment and Technology. Co-operation and partnerships between public and private sector. Regional and inter-regional approaches. Investments, the main theme of the last IEF merits the continued, on going attention of Ministers. 

Dialogue of the Interdependent

Let me conclude by emphasizing that 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 industrialized countries, to put their concerns and policy views on the table and to listen to, and better understand, those of others. An informal dialogue of the interdependent, where Ministers can identify effective and sustainable ways of promoting global energy security across traditional political, economic and energy policy dividing lines.