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The New Asian Energy Identity

25 November 2005

New Delhi, India

Few would dismiss the vision that the 21st Century is Asia's Century. I am confident that Ministers around this table certainly would not. Asian and international energy co-operation will be crucial for that vision. Energy developments will have wider economic and political consequence in your region. The impact of regional Asian energy developments will be global. 

Let me thank our host H.E. Minister Aiyar for convening this meeting and for so eloquently sharing his Asian Energy Vision with us. I am greatly honoured to have this opportunity, from my global vantage point, to take part in this first Ministerial Roundtable of North and Central Asian Producers and Principal Asian Consumers with its focus on the potential for regional co-operation in the hydrocarbons economy. 

The number of countries around the table is not great. But your clout as energy producers and consumers is. You represent more than half of the World's population and the greater part of the surging global energy demand expected in the decades ahead. The oil and gas reserves in your region are substantial. 'Security, Stability and Sustainability in the Asian Hydrocarbons Economy' is a theme not only of regional, but also of wider global interest and consequence. 

Your meeting follows, and it supplements, the First Round Table of Asian Ministers on Regional Co-operation in the Oil and Gas Economy that H.E. Minister Aiyar convened in New Delhi in January this year. The IEF Secretariat is proud to have associated with that Ministerial Round Table co-hosted by Kuwait and attended by Ministers of the principal oil and gas producing countries of West Asia, the Gulf countries, and by Ministers of the principal Asian consuming countries. These principal Asian consumers are here also today. Looking back, it is clear that the January meeting gave a decisive political spark to a new and evolving Asian Energy Identity. The next of what will continue as a series of such Asian Ministerial Roundtables will take place in Saudi Arabia with Japan as co-hosting country. The IEF Secretariat is playing a facilitating role.

A defining issue

Oil prices and energy security remain at the top of the international political agenda. Oil importing, industrialized countries warn of the detrimental effects that sustained, high oil prices have on the world economy. Oil-importing developing countries are suffering 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. 

There are several factors behind the higher level of oil prices and the volatility that we have today. Surging demand in Asia, economic recovery, bottlenecks throughout the supply chain, speculative activity and expectations of future tightness as well as terrorist attacks and political uncertainties, and this year also destructive forces of nature. 

The shorter-term perspective is a formidable challenge for governments and industry. The longer-term scenario is even more daunting. The increase in global energy demand foreseen in the years ahead is substantial. A 50% increase by the year 2030. 60% of that increase will be met by oil and natural gas. Most of this increase in demand will come in the developing countries, especially in Asia, as their economies grow. It is estimated that total investments of USD 17 trillion are required for the energy supply infrastructure needed to satisfy global demand the next twenty-five years. 

Indeed, energy is a defining global issue in this new Millennium. The world will need more and cleaner energy used in a more efficient and sustainable way. Accessible and affordable to a larger share of the world's population. 

The need for dialogue

Oil and natural gas are strategic commodities. Crucial for national economic and social development in both energy exporting and importing countries. Energy is important for commercial and political relations between countries. It fuels the world economy. Production and consumption of energy impact the environment. Energy influences, and is influenced by, international politics. It is difficult, indeed, to imagine an area, where nations are more interdependent than in the confluence of energy, environment and economic development. 

We have in the past seen how geo-political realities of the day traditionally would determine to a great degree what could, or could not be done in terms of international energy co-operation. Today, we see new patterns of co-operation emerging. This meeting is a case in point. As H.E. Minister Aiyar noted, long-standing relations in your area are being re-established. And these relations of old is being fuelled by new linkages of oil and natural gas New energy projects and ties that make economic sense will be implemented and contribute to shaping new and evolving geo-political realities, in Asia and elsewhere. 

This is a time to join hands in global dialogue and partnership to promote energy security and address the links between energy, environment and economic development in an increasingly interdependent world.

Unique forum

And that global dialogue is taking place at political level in the International Energy Forum, across traditional political, economic and energy policy dividing lines between nations. Nowhere else do ministers of energy producing and consuming countries, of industrialised as well as developing countries, meet in informal dialogue. Not only ministers of IEA and OPEC countries, but also ministers of important countries outside these two main producer and consumer organizations, countries represented at this table, that will increasingly impact the global energy scenario.

The series of IEF Ministerial meetings started in 1991 and has contributed to a convergence of views. Growing awareness of interdependence, of mutual vulnerability and of 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, when producer-consumer relations evoked images of confrontation. 

The 9th IEF Ministerial, that took place in Amsterdam in May 2004, gathered some sixty countries. Ministers focused on the need for substantial investments in the energy sector to meet projected demand. They advocated unhindered access to capital, energy technology and markets for development of production, transit and transport capacity. They reaffirmed the sovereign rights of states over their natural resources, while also recognising the commercial objectives of oil and gas companies. Ministers echoed the strong messages from industry that stable and transparent economic, fiscal and legal frameworks need to be in place to attract sufficient foreign investment. 

The Road to Doha

We are now preparing for the 10th IEF Ministerial in Doha, Qatar on 22-24 April next year. Energy security will be the main theme. China will host a meeting in Beijing in two weeks' time of an Informal Support Group of countries set up to advise on the Ministerial agenda. Some of these supporting countries are represented also at our table today: China, India, Japan, Korea and Russia. As morning discussions have confirmed, you have important input to give, not least in bringing regional Asian perspectives and interests to bear on the global dialogue. I am looking forward to an increasingly active Asian effort and participation in the IEF. 

Last Saturday, on the road to the Doha Ministerial, ministers of key energy producing and consuming countries and presidents of leading energy companies met in Riyadh on occasion of the inauguration the new headquarters of the International Energy Forum Secretariat. Again, from our group today, China, India, Japan, Korea and Russia were among the major players represented, along with the main IEA and OPEC countries. Participants emphasized the importance of the global dialogue in the IEF for energy security and a sustainable energy future. They focused on issues such as the global economy and the oil market and industry, petroleum industry technology and the importance of better data and information for oil market stability. 

Participants confirmed their interdependence in promoting energy security and their shared interest in reduced market volatility and prices at reasonable levels for both consumers and producers. They recognised the contribution of petroleum producing countries to meeting increasing energy demand, while also underscoring the need for improved energy efficiency, development of new technology and timely investments to meet future requirements. Participants underscored that greater market transparency as well as timely and reliable data on oil production, demand and stocks would reduce market volatility and provide for a more stable investment climate. They expressed their support of the Joint Oil Data Initiative. 

Flagship activity

So did the G8 Heads of Government in their Gleneagles Summit statement this summer, when they highlighted the importance of the producer-consumer dialogue in the IEF and the Secretariat's co-ordination of the Joint Oil Data Initiative. That G8 emphasis has later been echoed also by other regional and international organizations, including APEC. 

It is a flagship activity of the IEF Secretariat to coordinate the Joint Oil Data Initiative with the support of APEC, Eurostat, IEA, OLADE, OPEC and the UN. The World Database of this inter-organisational initiative was released to the public by King Abdullah of Saudi Arabia, when he inaugurated our new headquarters in Riyadh last week. 92 countries, representing 90% of global supply and demand, are now submitting data on oil production, demand and stocks. All but three of the countries around this table are so far participating in the Joint Oil Data Initiative and submitting oil data. May I invite also Azerbaijan, Turkmenistan and Uzbekistan to join in this global effort, the objective of which is to enhance our common energy security.

Energy Security

Energy security is not only the theme of the next IEF Ministerial. As our co-host H.E. Minister Khristenko underscored, it is also the priority of Russia's presidency of the G8 next year. We are inviting and looking forward to H.E. Minister Khristenko bringing Russian perspectives and G8 energy minister perspectives on energy security and efficiency to the wider global assembly of nations in the IEF in April as a stepping-stone to the G8 Heads of Government Summit next summer. 

Energy security is a complex and broad-based issue. It is about hydrocarbons, diversification of supplies and energy mix. It is about investments and infrastructure. It also has to do with overarching imperatives of economy, politics and the environment. Energy security has domestic and foreign policy implications. It translates into producer-consumer interdependence. Nowhere could this be truer than in Asia. With energy hungry, growing economies in the East and South. With ample reserves of oil and gas in the North, Centre and West. 

There is no quick and lasting fix to the challenge of global energy security. The cluster of energy security issues must be addressed in on-going dialogue not only between nations at political level, regionally and globally, but also in dialogue and partnerships between governments and industry. 

Parallel lanes of dialogue

The Asian dimensions of the global energy dialogue will assume increasing importance in the years ahead. Your discussions and national policies will define your regional Asian energy future and make a global difference. 

The global energy dialogue is definitely also about such regional and inter-regional dialogues. Parallel lanes of global and regional dialogue and co-operation are important to energy security in a multi-polar energy world. Regional approaches and solutions can be stepping-stones to subsequent global approaches and solutions. The IEF Secretariat is uniquely placed to serve as a catalyst link between inter- and intra-regional dialogues on the one hand and the global dialogue in the IEF on the other. 

On that note, inspired by our host H.E. Minister Aiyar and echoing an important point made by our co-host H.E. Minister Khristenko, I would like to conclude by recalling the 'Devotions upon Emergent Occasions' that a non-Asian poet wrote almost four hundred years ago. Not least since our regional Asian meeting today is an 'Emergent Occasion'. The seeds sown today will have their follow-up in dialogue and co-operation. The English poet John Donne wrote, 'No man is an island entire of itself, every man is a piece of the continent, a part of the main'. Likewise in contemporary energy terms, no region, or continent, is entire of itself. The Asian hydrocarbons economy is integral to, and inseparable from, the global hydrocarbons economy. 

Let me again thank H.E. Minister Aiyar for convening yet another Ministerial Round Table of regional and global energy significance and promise, and also thank the high-level participants for sharing their valuable insight. I wish you all success in your national and regional policy endeavours and urge you to make use of the International Energy Forum for wider, global dialogue and co-operation at your level of Ministers.