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EU Energy Commissioner At Jeddah Energy Meeting

Andris Piebalgs, EU Energy Commissioner, Jeddah Energy Meeting, Sunday 22 June 2008

Your Royal Highness, Prime Minister, Your Excellencies, Ladies and Gentlemen.

First of all, on behalf of the European Union, it befalls me to thank His Royal Highness for taking the initiative to organise this important gathering at this time, and for the wise words he expressed. In the conclusions of their Summit, Heads of State and Government of the European Union, who met two days ago, have welcomed the decision by Saudi Arabia to call a meeting between producer and consumer countries in Jeddah in the wake of the concern to the continued surge in oil prices they expressed. This laudable initiative has already triggered a lot of attention world-wide, and expectations are high.

His Royal Highness and Prime Minister Brown have identified key issues that have brought us here today. Let me focus on two points.

Firstly, they have both identified that the very high oil price that we now see, which is a result of increasing demand and speculation regarding worries for the future rather than any lack of oil today, are neither in the interests of supplying nor of consuming countries. For the first time in years, much of the global economy is facing the spectre of increasing inflation and economic slowdown.

With a 37% share in EU energy consumption coming from oil it is easy to understand the importance of the actual and potential impact on our economies and citizens. We have seen strikes and protests at the high prices. Discontent is on the rise, from fishermen and farmers to transporters and energy-intensive industries.

And to make things even worse, oil prices come with a period of unprecedented high food prices jeopardising the access of people to their basic vital needs.

A stable, evolving oil market, one in which all our citizens can trust in the long term, and on which they are willing to rely and stake the future of their economic well-being, is vital for us all. A rapid move away from oil based transport, out of fear of the future, makes no sense when our citizens can have confidence in exactly the issues under discussion today.

Secondly, therefore, His Royal Highness and the Prime Minister have identified that a return to an oil market in which our citizens can have long-term confidence requires a real partnership between suppliers and consumers. This is a joint concern and requires us to act together. We are facing a unique situation, and one that we should see as an opportunity to work together, and to set a precedent for the future.

Such a partnership therefore requires action by us all, and together.

It is widely acknowledged that current oil prices are indeed damaging for both consuming and producing countries. We have a common interest to work as a partnership to reduce volatility in the markets and bring oil prices back to sensible levels. We need to act together to return confidence and stability to the world economy and prevent recession. This can only be done by addressing market fundamentals.

On behalf of producers it requires even greater efforts to demonstrate that supply can and will meet reasonable demand in the coming years, at reasonable prices - It requires therefore investment and transparency, and I think we all recognise the importance of the recent announcement of His Royal Highness on this issue in this respect. Oil producing countries should increase both production and investment in new production capacity.

On the other hand, it also requires greater efforts from consuming countries; to ensure real transparency and predictability regarding future oil demand, enabling producers to invest wisely and timely.

And it requires consumers to make greater efforts to limit the growth in oil demand, by using precious oil more wisely, by being far more energy efficient. The International Partnership on Energy Efficiency Cooperation, just agreed two weeks ago in Japan, can play a major role here. Furthermore, we will have to play a leading role in investing in new technologies, such as carbon capture and storage, to ensure the long term future of oil and gas in a carbon constrained world.

It also requires the governments of consuming countries to be more attentive to ensuring that their most vulnerable citizens are protected from the worst effects of volatility of energy prices. And they need to make the positive efforts that producers are taking clear to their citizens.

So it is evident that a partnership can be in the interests of all, and that it can be a long-term one.

I would suggest therefore, a clear objective for such a partnership, that all can understand. This may be, for example, a joint commitment to take the necessary steps with the aim of bringing oil prices to a more reasonable level, in the order for example of a 2-digit figure per barrel, and to stabilise it at such levels for a reasonable period.

Such a shared objective would clearly meet the needs of producers, and enable the global economy to breath again.

Your Royal Highness, Prime Minister, Your Excellencies, Ladies and Gentlemen.

Today's meeting represents an opportunity to make real progress on an issue that is vital to every citizen on the planet; from the poorest to the very rich. On behalf of the European Union I can unequivocally state that we will play our part in any such partnership. We would welcome a follow up mechanism that would enable to fully implement the final conclusions of the Jeddah Meeting, and to meet at regular intervals. We need to be result-oriented, and to show our industries and citizens that the current situation is of concern to us all.

Once again, finally, I would therefore like to thank His Highness for the initiative of organising this meeting and encourage us all to seize this opportunity, ensuring that it has a concrete and positive consequence, of benefit to all.

Thank you for your attention.

ENDS

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