New charter strengthens co-operation between energy producing and consuming countries
23 February 2011
An historic charter which creates an ‘enhanced framework’ for dialogue between energy producing and consuming countries has been signed by 87 ministers and high-level delegates from the International Energy Forum’s (IEF) member countries.
According to Ali al-Naimi, Saudi Arabia’s Oil Minister, this Charter aims to create a “global energy market characterised by transparency and stability” and to “strengthen co-operation for the benefit of future generations.”
Secretary-General of the IEF, Noé van Hulst, explained that the Charter reinforces a commitment to a more open, informed, and fruitful dialogue.
“It is this kind of dialogue that helps foster greater mutual understanding between producing and consuming countries on energy policy issues and, where possible, narrows the differences in views and helps build trust in policy intentions,” he said.
The Charter was signed at an IEF extraordinary ministerial meeting on 22 February. Countries committing to the Charter at this meeting already account for more than 90% of global oil and gas supply and demand. The Charter will strengthen the management of the Forum secretariat and establish its finances on a stronger and more predictable basis – particularly with such wide endorsement of the Charter at the very outset.
The meeting also took place as political tensions remained high in the Middle East. Ministers from the IEF member countries stood firmly together with a clear message: that both producing and consuming countries have tools at their disposal – such as reserve oil stocks – to respond to any disruptions in the supply of oil that may occur as a result of the political uncertainty.
Nobuo Tanaka, the Executive Director of the International Energy Agency (IEA), welcomed the Charter as an important development in the producer-consumer dialogue.
Speaking at the meeting, which took place in Saudi Arabia’s capital, Riyadh, he said: “As the global economy continues to pull out of economic recession, we all have an interest in price stability, a well-supplied market, and the ability to respond effectively to events. We therefore have a common interest in this dialogue and in strengthening the operation of the IEF.”
Mr Tanaka stressed that price stability and energy security (the uninterrupted availability of energy sources at an affordable price) are the products of transparency, dialogue and a better understanding of the market.
Work with OPEC and IEF
He added that the IEA’s joint work programme with the IEF and OPEC, the cartel of 12 oil-producing countries, has shown “the continuing value of technical level discussions on complex market operations and forecasting techniques.”
The joint work between these organisations on future energy outlooks, Mr Tanaka noted, sets the way for a fruitful exchange of assumptions and forecasts which underpin both OPEC’s and the IEA’s analysis.
“Even though differences in those outlooks and economic assumptions will persist, having distinctive points of view does not undermine the quality of our respective analyses – quite the opposite,” he said.
“On oil price formation for instance, this dialogue revealed a good deal of consensus as to the complexity of the interplay between fundamentals and financial markets in determining oil prices,” Mr Tanaka observed.
Praise for JODI
During his speech to Energy ministers, the IEA’s Executive Director also praised the Joint Oil Data Initiative – now called the Joint Organisations Data Initiative (JODI) – for its contribution to transparency in the market. Mr Tanaka welcomed JODI’s recent move to focus on a broader range of areas beyond oil, such as gas.
“We strive with our JODI partners and with our own governments to continue the improvement in data quality and timeliness,” he concluded.
What is the International Energy Forum?
The IEF grew out of the dialogue, which began in 1991, between major energy consumers and major energy producers. Every two years, it organises the largest gathering of Energy Ministers. The IEF has developed as a neutral forum for informal discussions on pressing international energy questions.
What is the Joint Organisations Data Initiative?
JODI aims to moderate undue price volatility, thereby increasing investor confidence and contributing to greater stability in energy markets worldwide.
Back in 2000, ministers at the 7th International Energy Forum called for an action to address the apparent lack of data transparency in oil markets, seen as a causal factor in excessive price fluctuations. Consequently, the following year six organisations – the IEA, APEC, Eurostat, OLADE, OPEC and UNSD – launched the initial Joint Oil Data Exercise in order to address this concern. JODI was established as a permanent mechanism in 2003 and the IEF secretariat assumed responsibility for coordinating JODI in 2005.
Photo: Heads of delegation at the IEF ministerial meeting in Riyadh on 22nd February. ©IEA