By
Ambassador Arne Walther
I
am greatly honored 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 cooperation 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 supplements, the First Round Table of Asian
Ministers on Regional Cooperation in the Oil and Gas Economy
that HE Minister Aiyar convened in New Delhi in January this
year. The IEF Secretariat is proud to have been 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 and 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. Of that increase,
60% 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 $17 trillion are required for the energy supply
infrastructure needed to satisfy global demand the next 25 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 geopolitical realities of the day
traditionally would determine to a great degree what could,
or could not be done in terms of international energy cooperation.
Today, we see new patterns of cooperation emerging. This meeting
is a case in point. As HE 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
IEF, across traditional political, economic and energy policy
dividing lines between nations. Nowhere else do ministers of
energy producing and consuming countries, of industrialized
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 cooperation. And difficult short-term
issues are being addressed in a more cooperative 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 60 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 recognizing
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 the occasion of
the inauguration of the new headquarters of the IEF 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
recognized 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 (JODI).
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 coordination
of the JODI. 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
JODI with the support of APEC, Eurostat, IEA, OLADE, OPEC and
the UN. The World Database of this inter-organizational initiative
was released to the public by King 'Abd Allah of Saudi Arabia,
when he inaugurated our new headquarters in Riyadh in November
(MEES, 28 November). Ninety-two 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 JODI 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 HE Minister Khristenko underscored, it is also
the priority of Russia’s presidency of the G8 next year.
We are inviting and looking forward to HE 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 ongoing 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 cooperation 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 HE Minister Aiyar and echoing an
important point made by our co-host HE Minister Khristenko,
I would like to conclude by recalling the “Devotions upon
Emergent Occasions” that a non-Asian poet wrote almost
400 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 cooperation. 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.
Ambassador
Arne Walther,
is the George Patton Chair of Business and Economics at the
College of Business Administration at Ohio Northern University
and the Moderator of the Gulf Energy Program at the GRC and
Secretary General of the International Energy Forum (IEF), former
Director General, Ministry of Foreign Affairs, Oslo, Norway
and former Chairman of IEA Governing Board. Petroleumworld not
necessarily share these views.
Editor's Note: This his paper was deliver by Ambassador Walter
at the Ministerial Round Table on Cooperation between North
and Central Asian Producers and Principal Asian Consumers regarding
Stability, Security and Sustainability in the Asian Hydrocarbons
Economy, held in New Delhi on 25 November and first publish
by Middle East Economic Survey-MEES, on December 26, 2005. Petroleumworld
reprint this article in the interest of our readers. Petroleumworld,
do not reflect either for or against the opinion expressed in
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