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Producer-Consumer Relations: The Way Forward, a Brainstorming

5 February 2004

Bangkok, Thailand

Let me commend the IEA Secretariat on organising yet another successful meeting of experts from energy exporting and importing countries. And add a word of gratitude to the Royal Government of Thailand for their co-operation and support. 

IEA experts' meetings have played an important role in efforts to enhance what is a necessary global dialogue on energy. Addressing topical energy issues from the academic, technical and policy development perspectives, these meetings at experts' level give input to the political level discussions in the International Energy Forum. 

Two months ago, I took charge as the first Secretary General of the International Energy Forum. We are now in the process of setting up a new international secretariat headquartered in Riyadh. The theme of our brainstorming session gives me a welcomed, early opportunity to briefly present the International Energy Forum and Secretariat and to say a few words with regard to our way forward. 

This year, the IEA's experts' meeting has her feet firmly planted in Asia. It is highly appropriate that our venue is Asian. This part of the world has increasing impact on global energy, environmental and economic developments. This follows suit with the last IEF Ministerial which took place in Japan late 2002, reflecting the importance attached to Asia also at the political level. 

The theme for the next IEF Ministerial, which will take place in Amsterdam 22-24 May this year, is "Investing in Energy: Choices for the Future" Investments are in focus here in Bangkok at experts' level as well. Our exchange of views and discussions yesterday and today will, as before, feed very relevantly into a subsequent discussion at political level. And let me also recognize the IEA's important and pioneering "World Energy Investment Outlook" that feeds so usefully into the producer-consumer dialogue at both political and experts' level. 

Investments needed to meet rising energy demand 

By the year 2030, world energy demand is expected to be 2/3 higher than today. The good news is that the Earth's energy resources are seen to be adequate to meet rising demand for at least the next three decades. 

Yet, there are many reasons for concern. Concern about security of energy supplies, concern about investment in infrastructure, concern about the threat of environmental damage caused by energy production and use, and also concern about the unequal access of the world's population to modern energy.

According to the IEA, total investments in the range of USD 16 trillion are required for the energy supply infrastructure needed to satisfy expected demand in 2030. Almost half of this will take place in developing countries. More good news is that total world financial resources should be sufficient to finance the substantial investments needed. Yet, there are challenges, economic and political. 

The economic challenge will be to mobilise these new investments. How will necessary investments find their way to the energy sector considering competition for funds also from other important sectors of the economy? Who will invest how much, in what, and where, in order to manage supply and demand for both present and future generations? 

The political challenge will be to ensure a common energy future where energy supply and demand are balanced in such a way as to promote, and not jeopardise, the goal of sustainable global economic, social and environmental development. This is a mega-challenge that must be addressed in dialogue not only between nations at political level, but also in dialogue between governments and industry. 

We will need more and cleaner energy, used in a more efficient way, and accessible and affordable to a larger share of the world's population. 

The International Energy Forum

Against this backdrop, a few words then about the mission and objectives of the International Energy Forum and its new international secretariat. 

IEF ministerial discussions have focused on security of energy supply and demand as well as on the links between energy, environment and economic development. The series of ministerials has, hand in hand with the parallel process at expert's level, contributed to a convergence of views. The utility of global energy dialogue is no longer questioned. 

Energy Ministers from some sixty countries and heads of international energy organisations have been invited to meet at the 9th International Energy Forum hosted by the Netherlands in Amsterdam. In addition to plenary discussions addressing the main theme of investments, Ministers will also address a host of other energy related issues in informal bilateral exchanges. They will interact with leading CEOs in a special International Energy Business Forum immediately preceding their own deliberations. 

Unique in participation and approach

The producer-consumer dialogue at political level in the IEF is unique in its global participation and perspective. It is a meeting place not only for ministers of IEA and OPEC countries, but also for ministers of important countries outside these two main producer and consumer organisations; Russia, China, India, Brazil and South Africa to name a few, that already have, and will increasingly have, substantial impact on the global energy scenario. In the IEF, these countries can participate on an equal footing with their peers in OPEC and the IEA. This gives the global energy dialogue added forward-looking force and relevance. 

The IEF is unique also in approach. It is not a negotiating or decision-making body. It is a forum for discussion, exchange of information and policy views, as well as informal contact at political level. These exchanges have contributed to greater mutual understanding, enabling more enlightened national decision-making and closer co-operation within and between energy organisations. 

Secretariat mission and objectives

At the IEF in Osaka a little more than a year ago, Ministers endorsed the proposal of HRH Crown Prince Abdullah of Saudi Arabia to set up an international secretariat, headquartered in Riyadh, to further strengthen the process of global dialogue on energy at the political level. 

The new IEF Secretariat will assist countries hosting the biannual ministerial meetings. We also envisage organising, and co-organising with others, a series of supporting meetings, seminars and roundtable discussions at political and expert's level, with regional or global scope. The Secretariat will contribute to enhanced data collection and transparency. It will interact with governments, industry and organisations with a view to channeling and generating workable ideas for strengthening the global energy dialogue in rhythm with and in anticipation of evolving global circumstances. The dynamic nature of energy markets, and external developments that impact the energy scenario, lend weight to the Secretariat's brief to help ensure the continuity of energy dialogue also in the periods which bridge the biannual Ministerial Forums. 

At the Amsterdam Ministerial, I will present an outline of suggested elements for the Secretariat's first Programme of Work. Taking on board comments and suggestions by the Ministers, the Secretariat will present, as soon as possible after the Ministerial, a draft Programme of Work to the Executive Board of the Secretariat for discussion, necessary adjustments and approval. With that approval, we will have our more detailed marching orders. 

It is my hope that ideas will emerge from our Bangkok meeting as well that can be injected into the preparation of our Programme of Work. Of particular interest to you might be our mandate to carry out, commission and co-ordinate studies that are of common interest to producer and consumer countries. Examples of topics for possible consideration included in our Operational Guidelines are: security of supply and demand, investments, resources, energy related trade issues, taxation, clean fossil fuels, response mechanism, energy prices, environmental aspects and energy as a tool for economic development and poverty alleviation. 

In the run-up to the Ministerial, I am also availing myself of contacts directly with participating governments and opportunities in other conferences to identify possible activities for our Programme of Work. 

Let me at this stage mention one specific project of note, that is JODI, the Joint Oil Data Initiative. Six international organizations are here engaged in efforts to improve the quality, timeliness, coverage and scope of data available to the oil market with the aim of facilitating informed decision-making. I am looking forward to meeting representatives of these organizations (APEC, Eurostat, IEA, OLADE, OPEC and the UN) in Amsterdam next month to learn more about JODI and to discussing how the IEFS might usefully contribute to the further enhancement of this important international data initiative. 

Industry participation is crucial for a purposeful global dialogue on energy. Our focus on investments, here in Bangkok and in Amsterdam, is a case in point. Setting up an Advisory Committee of industry representatives to give input and guidance to the Secretariat is something now under consideration. 

We are now in the process of recruiting staff, both expatriate and local, to the new Secretariat. Nothing would please me more than learn that some of you might wish to join the Secretariat or explore ways in which your institutions and the IEFS might co-operate to enhance the producer-consumer dialogue. 

The Road Ahead

There is every reason for deepened global dialogue and co-operation to continue as an energy mantra for the future. We know that energy will continue to be crucial for economic and social development in individual countries. We know that energy will continue to be important for commercial and political relations between countries. We know that production and consumption of energy will continue to impact the global environment. We know that energy will continue to influence, and be influenced by, international politics and the world economy. 

The past has shown how energy, especially the strategic commodity oil, and excessive market volatility, can create conflict or exacerbate existing political tensions between countries or groups of countries. Today, we see how international dialogue and co-operation in energy is to mutual benefit. The atmosphere for long-term co-operation has improved. Difficult short-term issues are being addressed in a more co-operative way than before when the atmosphere was confrontational. Greater stability and predictability in energy developments are increasingly seen as a shared goal that can facilitate long-term economic planning and have a positive influence on political developments as well. 

The "Three E:s" - energy security, environmental protection and sustainable economic growth will remain at the core of the producer-consumer dialogue at all levels. We will continue to look at market developments and availability of resources. Transparency and co-operation in statistics and technology will assume increasing importance. 

Also, I expect that the producer-consumer dialogue at both political and expert's level will increasingly have to relate to processes elsewhere which have bearing on energy policies. I think it important that we, from our energy perspective, should seize opportunities to feed energy input into overall national policy-making and decisions in other international fora that have energy implications. 

Many lanes

In conclusion, let me happily remark that there is a forward, in fact many ways forward, for producer-consumer relations. We are not standing at the edge of a cliff or facing the wall. The road ahead is one of interdependence, mutual vulnerability and most importantly win-win opportunity. The road ahead is broad and has many lanes leading in the same co-operative direction. These lanes can accommodate many drivers, in many fields and at different levels of responsibility. 

I would see an enhanced producer-consumer dialogue at political and experts' level, and coordination between the two levels, as the glue with which all these lanes can be kept together, guiding us in the same and right direction. 

Our ground rules have been conducive to enhanced co-operation across earlier diving lines. I expect these to remain in force, exchange of information and policy views remaining the core character of our multilateral, global dialogue on energy. We are not going for collective action and negotiated, legally binding settlements. Multilateral fixing of prices and production levels remain out of bounds. The informality of our meetings is an asset to be guarded. 

And finally, I think we should always bear in mind that energy dialogue and co-operation is not an end in itself. It assumes wider significance as a means to promote equitable and sustainable economic and social development and to strengthen broader political co-operation.