The 8th OMC has gathered Ministers and leaders of the petroleum industry 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 consciousness is also a time of uncertainties that are prompting some countries and groups of countries to re-think fundamental policies. And the policy tuning of one country to meet new challenges, or to reduce its particular energy uncertainties, can in itself exacerbate 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, and groups of nations not least the EU, revisit and modify established policies, and shape new ones, 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 lies in mobilizing the substantial investments needed to secure future energy supply. The political challenge lies in operationalizing this 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.
The Mediterranean links Three Continents in energy co-operation by means of sub-sea pipelines, ship transport and offshore production. The energy producing and consuming countries, whose shores it touches, have complementary economies and heightened ambition for co-operation. The Mediterranean energy scene is one of consequence for global energy security.
That is why the Secretariat of the International Energy Forum is joining hands with you at this 8th OMC to put focus on 'The Mediterranean Dimension of Global Energy Security'. Inaugurated by Minister Bersani, the plenary session is for us an important stepping-stone to the 11th IEF Ministerial and 3rd International Energy Business Forum that Italy will host in Rome in 2008. The global dialogue in the International Energy Forum gathers Ministers of some sixty energy producing and consuming countries. It serves as a global meeting point for national policies and the evolving mosaic of regional energy ambition, not least the Mediterranean dimension.
From Confrontation to Dialogue
The past has shown how energy, especially the strategic commodity oil, and market volatility could impact domestic economic development. How energy could create conflict or exacerbate 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.
The global dialogue on energy in the IEF is unique in that it transcends traditional political, economic and energy policy dividing lines. It 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 have increasing impact on the global scenario.
Energy security, and the links between energy, environment and economic development, is the core focus of the dialogue in the IEF, which is unique also in approach. It is not a decision-making body. The informal and frank exchanges among Ministers in the IEF have contributed to greater mutual understanding, enabling more enlightened national decision-making and closer co-operation within and between energy organisations.
Heightened Energy Consciousness
In the coming years, I see producer-consumer dialogue and relations evolving against a complex backdrop, some catchwords of which are that:
- Fossil fuels remain 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.
- 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.
- Energy a 'Public Good'. 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 in a globalizing world.
At the 10th IEF Ministerial in Doha in April last year, energy Ministers discussed energy security as 'shared responsibility'. They interacted with CEOs of leading national and international energy companies in the 2nd International Energy Business Forum preceding their internal discussions.
Ministers noted that world economic growth had remained strong despite increasing oil prices and market volatility. They expressed concern over effects of sustained high price levels on the world economy, and especially on developing countries. Ministers 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 noted 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 by the G8 Heads of Government at their annual Summit under the Presidency of the Russian Federation. At the very top of their St. Petersburg Plan of Action on Global Energy Security, the Heads of Government underscored 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. It is a sovereignty issue. 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 for the consumers and security of demand for the producers. Ministers of some energy-importing countries are requesting a 'road map' from energy-exporting countries on future supply. And Ministers of some energy- exporting countries are likewise requesting a 'road map' on future demand from the energy- importing countries. As we know from other issues of international political concern, road maps are not always easy to make, and even when made can sometimes prove difficult to follow. But the realistic road maps that are possible to chart for energy security, could give useful guidance for the investment decisions needed to secure adequate energy supplies.
Energy security is more than an issue of technical arrangements and infrastructure. It has also to do with economics, geopolitics and the environment. It has domestic and foreign policy implications. The further development of a substantive and co-operative producer-consumer dialogue is a prerequisite for our common efforts for energy security. With the industry itself playing a crucial role to play in addition to governments.
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 series of bilateral solutions. But also multilateral regional and inter-regional energy co-operation is being strengthened around the world. Our Conference today is a case in point: 'The Mediterranean - A Sea for Three Continents'. We see increasing regional co-operation in Asia, in Africa, in Europe and in North as well as South America. Regional and inter-regional co-operation can provide stepping-stones to global approaches and co-operation.
Let me highlight the process of Roundtables of Asian Ministers on 'Regional Co-operation in the Oil and Gas Economy' initiated by India in January 2005 in association with the IEF Secretariat and with Kuwait as co-host. Ministers of the principal Asian importers and West Asian (Gulf) producers, 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, discussed on that occasion for the first time on a regional Asian basis issues of energy security, stability and sustainability. In addition to regional co-operative potential, they also recognized also very importantly that the Asian oil economy is integral to, and inseparable from, the global oil economy.
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 have invited Asian Ministers to Riyadh in May this year to carry forward these Asian discussions. The IEF Secretariat will host is this coming Roundtable at our Headquarters. Recognizing the increasing importance of Asian developments for global energy security.
JODI - A unique transparency initiative
A word about the need for better data and more transparency. So important for market predictability and for 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, in due course, being expanded to include also other sources of energy that are important in the world energy mix. The importance for energy security of the better data that JODI can present was subsequently echoed by the G8 Heads of Government in their St. Petersburg Plan of Action on Global Energy Security.
JODI is a concrete outcome of the producer-consumer dialogue. Co-ordination of this unique inter-organisational transparency initiative, with the full support of 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 production, demand and stocks through their organisations. For its success, we rely on the submission of timely and accurate data by participating countries. We encourage governments and companies to contribute to, and make use of, JODI.
A Global Energy Policy Interrelationship
From this global perspective, I am now eager to listen and learn from the distinguished panellists and other speakers as they focus on 'The Mediterranean Dimension of Global Energy Security. What better venue for Government and Industry to focus on this challenging Mediterranean than the OMC? And in Ravenna, the Cradle of European offshore production. Your views will serve as much appreciated regional in-put to our endeavour to strengthen the global producer-consumer dialogue in the IEF as we prepare for our 11th Ministerial and the 3rd International Energy Business Forum that Minister Bersani will host in Rome in April next year.