Oil markets and energy security are again in the headlines. Political leaders in oil-importing, industrialized countries warn of the detrimental effects that high oil prices have on the world economy. Oil-importing developing countries suffer from increasing oil import bills. Oil-exporting countries are producing what they can to help bring prices down. Surging demand in Asia, economic recovery, refinery bottlenecks as well as terrorist attacks and political uncertainties in the Middle East are seen as driving factors behind the higher level of oil prices. There has been a tightening of the supply demand balance and in simple terms there is no longer a comfortable cushion of spare capacity to offset market concerns.
Clearly, this is a time for producer-consumer dialogue. And clearly, it is a time for better statistics to help make that dialogue more purposeful. Let me congratulate the JODI partners on their pioneering endeavours. The IEF Secretariat shares the great expectations attached to JODI.
I would like to thank our hosts and organisers of this timely conference for the opportunity to give some perspectives on the importance of JODI for producer-consumer dialogue and the role of JODI on the Secretariat's road ahead.
A necessary dialogue on energy
The need for a global dialogue on energy is obvious. 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 impacts the global environment. Energy influences, and is influenced by, international politics.
The series of IEF ministerial meetings has contributed to a convergence of views. Greater stability and predictability in energy developments are seen as a shared goal that can facilitate long-term economic planning and have a positive influence on political developments as well. The mutual sense of interdependency, 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.
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; China, Russia, India, Brazil and South Africa to name a few, that will increasingly impact the global energy scenario. In the IEF, these and other countries participate on an equal footing with their peers in the IEA and OPEC.
The IEF is unique also in approach. Ministers come to the IEF to discuss common concerns, to exchange information and policy views. And to look for consensus-oriented approaches to the energy challenges ahead.
The IEF is not a decision-making organisation. Nor is it an organisation for negotiating legally binding settlements and collective action. Decisions are made by governments in capitals and in international organisations that are mandated for decision-making.
The 9th IEF took place in Amsterdam 22-24 May this year. Ministers exchanged views on energy challenges ahead, especially those related to investments. Some 60 countries and eleven international organisations participated. Never before had so many energy ministers attended a single energy gathering.
Ministers expressed concern about the prevailing high oil prices. Economic recovery worldwide, especially in developing countries, would benefit from stable oil prices at a reasonable level. Both producer and consumer countries had to take action.
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.
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.
And of special interest to this Bali Conference, Ministers expressed their commitment to improving transparency of oil data in JODI. They underscored that data transparency leads to greater predictability of markets and therefore to a more stable investment climate.
New International Secretariat
At their meeting in Osaka in 2002, Ministers endorsed the proposal of HRH Crown Prince Abdullah of Saudi Arabia to establish an international secretariat, headquartered in Riyadh, to further strengthen the process of global dialogue on energy at the political level. The Secretariat started its work in December last year.
The biannual meetings at the level of Ministers are the main events of the IEF and focus of the Secretariat. Support to the host country Qatar and their co-hosts China and Italy of the next IEF in 2006 will be our cardinal task.
The Secretariat will help to ensure the continuity of the energy dialogue also between the biannual meetings by organising supportive seminars and roundtables at political as well as experts' level.
The Secretariat will also contribute to enhanced data collection and transparency. We are happy to have Bruno Castellano on our staff as Energy Analyst, earmarked for JODI. Before joining us on 1 September, he worked on JODI at the IEA.
The IEFS and JODI
At the IEF in Amsterdam, the Ministers received with great interest the JODI update given jointly by the IEA and OPEC Secretariats on behalf of the six participating organizations. The demonstrations of the JODI World Database and Press Conference to launch it officially, also attracted attention. Ministers gave the initiative strong support and urged all participating countries to ensure that data submissions conformed to established expectations in terms of sustainability, timeliness, completeness and reliability.
The initiative has already achieved considerable success. It is, indeed, impressive for the exercise to have expanded within a very few years to include more than 90 countries, representing 95% of global oil supply and demand. Oil companies now participate and questionnaire completeness has improved significantly. It is encouraging that the timeliness of data submissions, as well as data quality and reliability are also improving.
We wish the six organizations all success in addressing outstanding issues and in further enhancing and developing the Initiative. And we are looking forward to receiving your proposed package for future co-ordination of JODI.
Co-ordination of JODI is, indeed, envisaged to be a major Secretariat undertaking. It has the political attention and endorsement of IEF Ministers. It could be a flagship of our activity to promote and deepen the producer-consumer dialogue. Our future co-ordinating role presupposes both the guidance and active support of the 6 organisations. We will further discuss with the JODI partner organisations the practicalities and resource demands of tasks where the IEF Secretariat in due course could:
- Co-ordinate and maintain the JODI world data base on a daily basis.
- Co-ordinate, evaluate, source and develop suitable database and related management software to support the JODI.
- Act as catalyst in co-operation with participating countries and organisations to improve the quality and timeliness of data submissions with the aim of increasing transparency.
- Develop ideas for improvement and expansion of the JODI and disseminate knowledge as resources allow.
- Participate in meetings of the JODI as well as in other relevant venues in pursuit of improved data transparency.
JODI emerged from the concern that the lack of reliable statistics was one of the possible reasons for the oil price volatility. The concern is still there and improvements to data reporting are a priority in order to increase transparency in the oil market.
This Bali Conference has given us a better understanding of what the JODI partners expect of the IEFS. We will follow up in further discussions so as to determine what we can deliver within our staff and financial resources as well as the time schedule for assuming agreed tasks.
JODI is a concrete expression of what the producer-consumer dialogue can accomplish. JODI is not only about data transparency. Other objectives behind this initiative include the harmonization of energy definitions. The release of the JODI database is a starting point towards full data transparency.
We will make our best efforts to move forward with JODI. We want to play our role in efforts to improve the transparency of the oil market in close co-operation and with the guidance and support of our JODI partners.