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The International Energy Forum and the Producer-Consumer Dialogue

15 February 2005

Algiers, Algeria

As we meet, oil prices are in the headlines. Energy security is again high on the political agenda. Government leaders are concerned. Oil importing, industrialized countries warn of the detrimental impact that 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 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, not least for Africa. 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 industrialise and their economies grow. In this longer-term perspective, production and consumption patterns, the energy mix as well as investment requirements, will evolve in a changing geopolitical environment. And these energy developments will influence that changing geopolitical climate. 

I am honoured and happy for the opportunity to speak on the producer-consumer dialogue from the vantage point of the International Energy Forum at this Second African Petroleum Conference and Exhibition. Let me thank the African Petroleum Producers' Association and the CWC for organising this timely event. And let me thank the Government of Algeria for their gracious hospitality. Global energy developments affect Africa and should also be influenced by Africa. I am eager to hear an increasingly forceful African voice in the global energy dialogue. 

A time for dialogue

Twenty-five years from now we expect global energy demand to be two-thirds higher than it is today. 85% of that increase will be met by fossil fuels. Total investments of USD 16 trillion are required for the energy supply infrastructure needed to satisfy global demand the next 25 years. Today, a quarter of the world's population (1.6 billion of 6.2 billion people) lacks access to electricity and two-fifths rely mainly on traditional bio-mass for their basic energy needs. In 2030, we expect that 1.4 billion out of the world's 8.1 billion people will still lack access to electricity. The world will need more and cleaner energy used in a more efficient way. It should be accessible and affordable to a larger share of the world's population, and that means not least to you in Africa.

Clearly, this is a time for global energy dialogue. Because 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 impact the global environment. Energy influences, and is influenced by, international politics. It is difficult to imagine an area, where nations are more interdependent than in the confluence of energy, environment and economic development.

The International Energy Forum

The International Energy Forum provides a venue for a global dialogue on energy at the level of Ministers. It is unique in its global perspective and participation. It gathers the industrialised economies of the IEA, the petroleum exporting countries of OPEC, and, very importantly, energy producing and consuming countries, outside these two main producer and consumer organizations. Countries such as Russia, China, India and Brazil that will increasingly impact the global energy scenario. African ministers participate as well - from Algeria, Angola, Egypt, Gabon, Libya, Nigeria, South Africa and Sudan. There is room for more. 

The IEF is unique also in approach. Ministers discuss common concerns, present their policy views and listen to those of others. They look for consensus-oriented approaches to energy challenges ahead. The IEF is not a decision-making organisation or a place where Ministers negotiate 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. 

IEF ministerial meetings focus on energy security as well as the links between energy, environment and economic development. The series of Ministerial meetings that started in 1991 have contributed to a convergence of views and growing awareness of interdependence. The mutual sense of interdependence, vulnerability and 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. 

Amsterdam Conclusions

Sixty-three countries and eleven international organisations participated at the 9th IEF Ministerial that took place in Amsterdam in May last year. Never before had so many energy ministers gathered in any one place at any one time. 

In Amsterdam, Ministers voiced concern about the high oil prices. 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 recognised.

Ministers echoed the strong message from CEOs of leading energy companies 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 and follow-up of the Johannesburg Summit was also emphasized, especially bearing in mind the energy needs of a growing world population. 

New Kid on the Global Energy Block

At the IEF Ministerial in Riyadh in 2000, Crown Prince Abdullah of Saudi Arabia suggested the need for a permanent Secretariat to support the global producer-consumer dialogue, what until then had been an informal process without any fixed institution. He offered Saudi Arabia as host country for this new body. The idea was endorsed at the following Ministerial in Japan in 2002. And the Secretariat started its work in December 2003. It is funded on the basis of annual voluntary contributions from participating countries. 

A cardinal task for the Secretariat in Riyadh is to support host country Qatar, and co-hosts China and Italy, in preparing the next Ministerial that will take place in Qatar in 2006. The Secretariat will also help to ensure the continuity of the ministerial level energy dialogue also between the biannual meetings by facilitating supportive meetings and roundtables in co-operation with governments and organisations. 

Let me come back to that after a few words on the third pillar of Secretariat activity. That is to contribute to enhanced oil data collection and transparency. IEF Ministers recognize that accurate and timely data are important to reduce market volatility. They have endorsed the Secretariat assuming a co-ordinating role in the Joint Oil Data Initiative (JODI) of which some of your countries are part. JODI coordination is set to become a flagship of our activity and will contribute to market stability and energy security. 

We hosted last month in Riyadh an inter-organisational meeting of the six organisations - APEC, Eurostat, IEA, OLADE, OPEC and the UN - that have pioneered and developed the Initiative. JODI is now established as a permanent mechanism with the objective of improving the quality and transparency of international oil statistics. More than 90 countries, representing 95% of global supply and demand, are now submitting data. Let me use this opportunity to urge also African countries to contribute timely and accurate data to JODI. 

Dialogues within the Dialogue

Previous speakers have underscored the need to deepen African regional co-operation and integration in energy enhance African energy security. 

The global energy dialogue is definitely also about regional and inter-regional dialogue. Dialogues within the dialogue, so to speak. Both global and regional co-operation are important to global energy security in a multi-polar energy world. Regional approaches are needed because perspectives and immediate interests can vary between regions, however interdependent and woven together by shared global interests they are. Some regions have a diversity that also requires sub-regional perspectives. The Executive Director of AFREC outlined yesterday five energy regions in Africa. 

Let me mention some such regional and inter-regional activities where the IEF Secretariat is involved as we prepare for the 10th IEF ministerial in Doha in April 2006. 

India's Petroleum Minister hosted in New Delhi last month in association with the Secretariat and with Kuwait as co-hosting country a 'Roundtable of Asian Ministers on Regional Co-operation in the Oil and Gas Economy'. This was the first time that the ministers of principal oil and gas importing countries in East and South Asia and principal oil and gas exporting countries of West Asia (or the Gulf as or Middle East as some would say) met on a regional basis. The oil producing countries in West Asia send two out of every three barrels of their exports eastwards in Asia. The principal importing countries in the East get four out of every five barrels of their imported oil from West Asia. The backdrop was also the surge in energy demand in Asia expected in the decades ahead and the fact that the bulk of the World's oil and gas reserves are located in West Asia. Clearly a new Asian energy identity has emerged. The Secretariat will facilitate a follow up Second Roundtable of Asian Energy Ministers, which will be hosted by Saudi Arabia and co-hosted by Japan.

At the request of the Energy Minister of Russia, we took part in the 4th Russian Oil and Gas Week and held a joint roundtable with Russian authorities on Eurasian energy co-operation last October. Also other Ministers have made specific proposals for Secretariat facilitation of regional dialogues. The Japanese minister on Asia and the Middle East, the Mexican on Africa-Latin America preparing for your AFROLAC conference in Mexico in 2006. We are associated with the Eurogulf project between the European Commission and the Gulf Co-operation Council, having hosted their first workshop in Riyadh last year. And we hope to facilitate a regional meeting hosted by South Africa later this year. 

In my view, the trend we see towards closer intra- and interregional co-operation will deepen and strengthen rather than detract from global co-operation. The Secretariat can play a useful role as a catalyst link between inter- and intra-regional dialogues on the one hand and the global dialogue in the IEF on the other. And in that global perspective, we attach importance to inter-acting with the UN Energy Task Force to promote share objectives as mentioned yesterday by UN Special Adviser Figueredo. 

Dialogue of the Interdependent

Let me conclude, Ladies and Gentlemen, 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 industrialised 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. 

Let me wish this Second African Petroleum Conference and those regional Conferences that will follow in the years ahead every success. The very event and the statements made yesterday and today, clearly confirm that you have an 'African Energy Ambition'. Let that ambition be seen and heard in the global energy dialogue in the International Energy Forum as well.