Brussels, 24/06/2008 (Agence Europe) - There will be no miracles in the short term: “Oil prices will not fall and (OPEC) has already done all it can,” said the President of the Organisation of Petroleum Exporting Countries, Algerian Energy Minister Chakib Khelil following the 5th EU-OPEC energy dialogue meeting, in Brussels on Tuesday 24 June. The European delegation was led by Energy Commissioner Andris Piebalgs, Council President, Slovenian Economy Minister Andrej Vizjak and his successor French Ecology Minister Jean-Louis Borloo. “We do not want to increase production,” said OPEC Secretary General Abdalla Salem El-Badri, believing that there was no shortage on the market. Differences between the EU and OPEC remain considerable, then, with the former believing that there is no reason for producer countries to cap production and that speculation is not playing a major role in the rise in prices, while the latter says that the market is well supplied, that there are sufficient stocks and that market speculation and the depreciation of the dollar are the main reasons for very high oil prices. “As for the basics, everything is going well. High prices can be explained by the sub-prime crisis in the United States, its impact on the dollar and the depreciation of the dollar, and also speculation. Add to this the introduction of bio-ethanol to the market and the worsening geopolitical situation, and all this leads to a difference of $40” on the price of a barrel since 2007, Khelil said. “Of course, we don't always agree, but our positions are coming closer. We are now working on the basis of facts, figures and reports, not hypotheses,” Piebalgs said, adding, “Consumer and producer countries are equally concerned by the high level and volatility of prices. What consumers do can undermine producers' possibilities for investment. We have to work together, then to assess what is causing these soaring prices and see how we can tackle volatility”. While he believes that, from the point of view of refining, “things are moving in the right direction”, since investment has been made, Piebalgs called to further study of the role of the financial markets. He welcomed the close cooperation between the EU and OPEC on climate change, R&D and training. “We have made progress in our dialogue which is resulting in mutual understanding so that the sector can operate properly,” stated Khelil. Borloo said that “a worldwide energy pact between producer and consumer countries is now essential because (their) interests are inextricably linked”.
In a joint statement, ministers, welcomed the progress made since the Vienna meeting in June 2007 (see EUROPE 9452), including a joint report on refining, the launch of a joint study on the impact of financial markets on oil prices and volatility, and discussions on setting up a joint Technology Centre. All these points were thoroughly debated.
Ministers underlined the importance of dialogue between producer and consumer countries, stable, transparent and predictable oil markets. While acknowledging the role of fossil fuels to respond to future world energy needs, ministers stressed the importance of widening the energy mix, in which renewables had to play an important part. Seeking sustainable development, they noted the need for increased efforts to avoid wasting resources, improve energy efficiency and develop clean technologies, such as carbon capture and storage (CCS).
EU representatives outlined the recent energy and climate change package of measures to combat climate change currently being debated in the EU and confirmed that these measures would not result in a reduction in European demand for oil. On this point, OPEC stressed the uncertainties related to the demand for its crude, stemming mainly from technology, alternative fuels and also consumer countries' policies. OPEC representatives presented their analysis of developments on the oil market, reiterating that it remains well supplied, with supply outstripping demand and crude stocks high. They also highlighted the role of financial markets, the depreciation of the dollar and speculation as key factors in high and volatile oil prices. Ministers also discussed the EU's long-term energy scenarios (up to 2030) and OPEC's world oil perspective.
Lastly, ministers agreed the following work programme: - a round table discussion on CCS in Brussels in late October 2008; - finalising the joint study on the impact of financial markets on oil price and volatility, to be followed by an international workshop in Vienna in early 2009; - a feasibility study on setting up an EU-OPEC Energy Technology Centre; - preparation of terms of reference for a joint study on the impact of biofuels on oil refining. The next EU-OPEC is scheduled for June 2009 in Vienna. (E.H./transl.rt)