Richard Melson

January 2006

IEF Inauguration

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November 21, 2005

Inauguration of the International
Energy Forum Secretariat

The International Energy Forum Secretariat (IEFS) was inaugurated on November 19, 2005 in Riyadh at a ceremony attended by King Abdullah. The IEFS is the result of then Crown Prince Abdullah's effort to improve the dialogue between oil producing and consuming countries. The ceremonies included the launch of the Joint Oil Data Initiative database, providing oil and gas information from about 90 countries.

This SUSRIS Item of Interest provides the text of King Abdullah's remarks at the inauguration as well as an article by M. Ghazanfar Ali Khan of Arab News, detailing the day's events and background on the IEF.

Address by Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz at the opening of the International Energy Forum Secretariat headquarters in Riyadh November 19, 2005

In the Name of Allah, Most Compassionate, Most Merciful

Praise be to God, and peace and blessings upon his messenger Mohammed and all his kin and companions.

Dear Friends: May Gods peace and blessings be upon you. It is our pleasure to welcome you to the Kingdom of Saudi Arabia, and to celebrate with you the inauguration of the headquarters for the International Energy Forum Secretariat, and the launch of the international project of the Joint Oil Data Initiative. It is our hope that the work of the Secretariat will contribute effectively to enhancing the dialogue between producers and consumers, and protect the global economy from turmoil. This is the reason why we proposed the establishment of the Secretariat five years ago.

Dear Friends: Our oil policy is clear, and is characterized by honesty and transparency. It is based on our firm belief that we are part of the world we live in, and that we share our world’s fortunes as well as misfortunes, and that our national interest does not conflict with the interests of the international community. This policy is based on two main objectives: the first is to realize a fair and reasonable price for oil, and the second is to provide adequate oil supplies to all consumers.

In order to realize these two objectives, we have increased our production capacity to a level that does not jeopardize the interests of future generations or do damage to the oil fields. We have adopted moderate positions, within and outside of OPEC, with regard to production and pricing. We have increased production whenever there were shortfalls in supply, and we have adopted a policy of consultation and coordination with both consumers and producers. However, all the efforts exerted by producing countries are fruitful only when they are met with a positive attitude by the major consuming countries, in the form of limiting speculation in the oil markets and refuting rumors and misleading information which cloud the realities of the market. It is also incumbent upon these nations to reduce the burdens on their citizens by reducing taxes on petroleum products when oil prices rise.

Dear Friends: Our oil policy is part and parcel of our overall policy which seeks dialogue rather than argument, and cooperation rather than confrontation.

We ask God Almighty to grant success to all who labor for the benefit of humanity, for He is the all hearer, the all responsive. God’s peace and blessings be upon you.

Cut Energy Taxes, Says Abdullah
M. Ghazanfar Ali Khan, Arab News

RIYADH, 20 November 2005 — Custodian of the Two Holy Mosques King Abdullah yesterday called upon oil consuming nations to cut energy taxes to bring down soaring prices. He said Saudi Arabia would continue its efforts to stabilize world oil market by ensuring adequate supplies.

"The oil policy of Saudi Arabia is based on two main factors: Achieving a reasonable and fair price for oil; and ensuring enough supplies to all the consumers," said King Abdullah while opening the headquarters of the International Energy Forum here.

"But all the efforts of the producing countries will not bear fruit if they are not met with positive steps by the main consumer states," he said. "These states should alleviate the ordeal of their citizens by cutting taxes on petroleum products when prices increase."

The king also launched the new oil database, prepared by the Joint Oil Data Initiative (JODI), during the ceremony attended by oil ministers of several producing and consuming countries. He emphasized the Kingdom’s readiness to increase oil supplies "without affecting the rights of our future generations and oilfields."

OPEC chief and Kuwaiti Energy Minister Sheikh Ahmad Fahd Al-Sabah supported King Abdullah’s call and said the Organization of Petroleum Exporting Countries would seek tax cuts in consumer countries.

"This is a financial issue of their own, but everyone should know that in Europe, 80 percent of the price (of oil) is made up of taxes," he told reporters. "They ask for an increase in production, and we ask for a cut in taxes ... which are one of the reasons for the hike in prices," he said.

The OPEC chief expected oil prices to rise again with the advent of a harsh winter in the Northern Hemisphere. "If the winter is very cold and long, undoubtedly the prices will again go up," he said.

The forum was the first major gathering for world’s energy consumers and producers after oil prices hit a historic high of $70.82 a barrel on Aug. 30, before retreating to around $57 at present. "The worst scenario now is that this (price) ceiling of $70 is the highest ceiling" that prices would not cross, he said.

In his address, Petroleum and Mineral Resources Minister Ali Al-Naimi said the establishment of the SR16.5 million IEF secretariat would institutionalize dialogue between producers and consumers.

Later speaking to reporters, Naimi said Riyadh was spending $50 billion to raise output capacity but wants a clearer picture of where the extra production is needed.

Producers are seeking "a road map for demand in consuming nations," Naimi said. "As producers, we do not want to build the facilities which will not be met by demand."

The oil minister, however, said Saudi Arabia’s expansion plans, which aim to increase output capacity to 12.5 million barrels per day by 2009, would not be made conditional on a guarantee of demand.

Qatari Energy Minister Abdullah Al-Attiyah said the energy market would see increased oil supplies in the second quarter of 2006, possibly pushing down world prices. "There will be more oil floating and this might be a concern, we have to deal with it very carefully," Attiyah told reporters.

The daylong closed session forum, meant to smooth out the volatility of the market and ensure stable prices, was attended by energy and economy ministers of the United States, France, Britain, Germany, Mexico, Iraq, Iran and the United Arab Emirates.

Established in 1991, the IEF serves as a vehicle for dialogue between oil and gas producers and consumers on vital issues like energy prices, security and supplies as well as technological and environmental issues.

US Energy Secretary Samuel Bodman, who is currently on a visit to Riyadh as part of a four-nation tour of the Gulf region, said on Friday it would take oil producers at least two years to provide enough oil that would ease concerns in the market.

Britain’s Finance Minister Gordon Brown said yesterday a database of world oil producers and consumers launched in Riyadh will help bring stability to the world economy.

French Finance Minister Thierry Breton said he and Brown had come to Saudi Arabia with a message from the G-7 industrialized nations for oil producing states to increase investment in production and refining to help curb high oil prices which he said had hurt the global economy.

Ambassador Arne Walther, IEF secretary-general, thanked Saudi Arabia and its Oil Minister Naimi for providing so much political and financial support to the forum’s activity and bearing the total cost of the building.

He said: "The opening of the IEF secretariat testifies to the importance and potential of the producer-consumer dialogue at the IEF at a time when oil prices and energy security are a major global concern".

He said that "the inauguration of the IEF secretariat by King Abdullah, with its meeting with ministers of key countries and industry executives, enhances the importance of the IEF, and Riyadh, as a focal point for global dialogue across traditional political, economic and energy policy dividing lines between nations". Addressing a press conference Friday night, Walther called on the ministers to contribute to the budget of IEF’s secretariat.

Source: Arab News

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