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Producer-Consumer Relations in a New Era

12 September 2006

Vienna, Austria

The splendour of the Hofburg reminds us of a time, almost 200 years ago, when the European powers of the day embarked on a New Political and Diplomatic Era. They established at their Congress of Vienna a new order for management of international affairs following years of military conflict and political volatility. That New Era lasted half a Century or so, double the time span of energy market outlooks that fuel discussions at international energy seminars of our day. The Regal Halls of the Hofburg call, I feel, for humility when embarking on the theme of 'Producer -Consumer Relations in a New Era'.

Heightened Energy Consciousness

'Era' is a very big three-letter word. The challenges, opportunities and complexities of energy do not make it smaller. If we have already entered a 'New Energy Era', it would seem to be an era of heightened energy consciousness around the world, an era with uncertainties and an era of increasing interdependencies among nations. 
Energy security continues to top the political agenda for energy importing as well as exporting countries, for industrialized as well as developing economies. It was the main theme of our 10th IEF Ministerial in Doha in April this year. Discussed as a shared producer-consumer responsibility. Energy security was also the priority theme of the G8 Summit in July. Heads of G8 Governments underscored the importance of the producer-consumer dialogue in the IEF at the very top of their St. Petersburg Plan of Action for Global Energy Security.
The transition from one era to another prompts re-think of fundamental policies. Indeed, we see national policies being tuned to energy demands and uncertainties of today and tomorrow. And the policy tuning of one country to meet new challenges and to reduce its individual energy uncertainties can in itself exacerbate or create new uncertainties for others. Not least considering the interrelationship between energy, environment and economic development. As well as the links between energy and geopolitics. Global producer-consumer dialogue acquires increasing importance as nations revisit and modify established policies, and shape new ones, in their quest for energy security in a 'New Energy Era.' 
Let me commend OPEC for convening this 3rd International Seminar. OPEC has established an important meeting place for dialogue among key Ministers, oil company executives and energy experts. I am honoured to share some perspectives from my vantage point. The global Ministerial level dialogue in the International Energy Forum. 

A New Energy Era

The 9th IEF Ministerial that took place in Amsterdam two and a half years ago spoke of a new era. Ministers envisaged 'a smooth transition to a new energy era for the longer term, facilitated by the presence of still ample oil and gas reserves'. Current expert scenarios and projections translate into a political consensus that 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 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. In dialogue and co-operation not only between governments. Also industry itself and other stakeholders have their integrated role to play in a comprehensive Global Energy Policy Interrelationship. 
Some catchwords for a new energy era of heightened energy consciousness:

- 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 among energy resources. 
- Resource nationalism. Nations wanting to make the most of their endowment.
- Energy interdependence or energy independence for energy security? 
- Environmental concern. Catastrophy or environmentally benign technological breakthroughs to save us?
- Vulnerability of energy production and supply to politically motivated attack 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.
- Demands for equitable access to energy for the quarter of the world's population who do not have it and who need it for a better life tomorrow.
- The shift to Asia of global economic gravity with geopolitical and energy implications.
- Increasing awareness of long-term communality of interests among producers and consumers in a globalizing world.

Shared Responsibility

At the IEF Ministerial in Doha earlier this year, Energy Ministers and their senior officials of 59 key countries, and heads of international organisations put updated focus on energy security. Recognizing the importance of interacting with industry itself, Ministers also met with CEOs of major international and national oil companies in the 2nd International Energy Business Forum preceding their internal discussions. The Doha Ministerial has provided the Secretariat with political guidance and a road map for our efforts, in co-operation with others, to enhance producer-consumer dialogue in a new era of heightened energy consciousness and as we prepare for the 11th IEF Ministerial that Italy will host in 2008.
Ministers noted that world economic growth had remained strong despite increasing oil prices and market volatility. They expressed, however, concern over the effects of sustained high price levels on the world economy, especially on developing countries. They attributed the 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 have increased anxiety in the market. 
Ministers confirmed their shared interest in reduced market volatility and prices at reasonable levels for both consumers and producers. They noted increasing producer and consumer interdependencies in 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.
As 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. They underlined the need to develop alternative sources of energy as well. And to increase energy efficiency. 
Ministers emphasized how crucial it is for the long-term energy security of both consumers and producers to improve access to markets, resources, technology and financial services. Bolstered by fair and transparent economic, fiscal and legal regulatory frameworks, and by good governance.

Transparency and data

They underlined the importance of transparency and exchange of data for market predictability and the investments required to enhance energy security. They reaffirmed their support to the Joint Oil Data Initiative, JODI for short, which the IEF Secretariat is coordinating, with the support of the IEA and OPEC, APEC, Eurostat, OLADE and UN. The JODI World Database, released to the public last year, carries data on oil production, demand and stocks from more than 90 countries covering more than 90% of global production and demand. Some Ministers called for JODI to be expanded to include also data for natural gas and other sources of energy that are important in the world energy mix. 
G8 Heads of Government emphasized in their St. Petersburg Plan of Action this summer the importance of this global and inter-organisational transparency initiative. The Secretariat will host the 6th Annual JODI Conference in Riyadh on 25-26 November this year, where progress so far will be reviewed and the way forward discussed. 
Co-ordination of JODI is a flagship activity for the Secretariat. Our unique contribution to the political call for the better data and increasing transparency that will strengthen producer-consumer relations in a new energy era. 

Global Energy Policy Interrelationship

The international political spotlight is now on energy security, shining perhaps more brightly and comprehensively than ever before. Everyone has something to say. Producer-consumer dialogue among energy ministers, as confirmed by the Doha Ministerial, has reached new levels of mutual understanding and awareness of the need to co-operate. Also Prime Ministers, Finance Ministers, Foreign Ministers, Environment, Development and Trade Ministers are adding their perspectives to the global energy dialogue. Nor are other stakeholders silent - financial institutions, other international organizations than energy organizations, NGOs, not least those dealing with environment and development, and the energy consuming public at large. Core to all this is a competent energy industry with its technology, capital and human resources doing the actual work, supplying society with much-needed energy. 
As national and global focus now is being put on issues of energy security, bilateral, regional and inter-regional energy co-operation is also being strengthened around the world. This gives additional impetus to the Global Energy Policy Interrelationship. Parallel processes of global and regional co-operation in a multi-polar energy world can be mutually supportive when heading in the same direction. The biennial IEF provides a global meeting point for the evolving mosaic of regional and inter-regional energy ambition. The IEF Secretariat can serve as a useful catalyst link to, and is indeed interacting with, several important regional and inter-regional endeavours, not least the process of Roundtables of Asian Energy Ministers initiated by India last year.

Unique Dialogue

The new energy era calls for a wider framework for producer-consumer dialogue. The International Energy Forum is uniquely poised to facilitate it. Because the IEF gathers under one global umbrella, Ministers not only of the industrialized energy consuming nations of the IEA and Ministers of the petroleum exporting countries of OPEC. It gathers very importantly also Ministers of key countries that are not members of those organizations. Such as Russia, China, India, Brazil, South Africa and others that increasingly will influence not only the global energy scenario, but the global economic and political scenario as well.
I see great potential for the further development of the International Energy Forum as a confidence-building process and focal point for enhanced 'Producer-consumer Relations in a New Era'. A forum for on-going dialogue among Ministers across traditional political, economic and energy policy dividing lines. Where Ministers voice their national interests and perspectives in the wider context of promoting common global objectives as well. 
In this New Era, 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 conduct that is reasonable and advantageous for all to follow. And from which to deviate in pursuit of short-term advantage at the expense of others, would be tantamount to shooting oneself in the foot, at the very least.