Opening address to the 144th Meeting of the OPEC Conference

No 2/2007
Vienna, Austria
15 Mar 2007

by HE Mohamed Bin Dhaen Al Hamli, President of the Conference and Minister of Energy of the United Arab Emirates

Excellencies, ladies and gentlemen,

Welcome to Vienna, for the 144th Meeting of the OPEC Conference.

I should like to begin by extending a special welcome to His Excellency Desidério da Graça Veríssimo e Costa, the Minister of Petroleum of Angola and Head of its Delegation, as well as other Members of the Delegation, who are participating in our Ministerial Conference for the first time as Full Members of OPEC. Your country’s decision to seek to take its rightful position among like-minded states, in the quest to ensure stability in the world oil market, is commendable. We, therefore, congratulate the Government and the people of Angola for becoming Full Members of our great Organization.

Congratulations are also due to His Excellency Dr Edmund Maduabebe Daukoru on his elevation to the post of Minister of the newly established Ministry of Energy of Nigeria.

I wish to extend the warm hand of friendship to the distinguished Observers from non-OPEC oil-producing countries at today’s Meeting — His Excellency Sameh Fahmy, the Minister of Petroleum of Egypt, His Excellency Nasser bin Khamis Al Jashmi, the Undersecretary of the Ministry of Oil and Gas of Oman, His Excellency Andrey G. Reus, the Deputy Minister of Industry and Energy of the Russian Federation, and Mr Raul Cardoso Maycotte, representing Mexico. Their presence reaffirms their countries’ continued support for OPEC’s market-stabilisation measures. I am pleased to welcome too His Excellency Suleiman J. Al-Herbish, the Director-General of the OPEC Fund for International Development.

I should also like to congratulate His Excellency Abdalla Salem El-Badri, who assumed office as OPEC Secretary General on 1 January. We wish him well as he settles down to address the huge challenges facing the Organization and the industry.

Since we last met as a Conference in Abuja on 14 December, the price of OPEC’s Reference Basket fell by around US $10 a barrel — just over 15 per cent — in the space of one month, stayed low for a short while and then gradually rose again to almost the same level it was three months ago. Indeed, the price on 17 January — $47.92/b — was the lowest for 20 months. Initially, the mild winter in the Northern Hemisphere reduced demand for winter fuels, supported by contra-seasonal rising heating oil stocks in a major consuming country. However, a combination of factors since late January have helped prices rally — these include a cold winter spell in North America, plans to refill a Strategic Petroleum Reserve, geopolitical tensions and refinery shortfalls.

Throughout this period, the market has been supported by OPEC’s two recent agreements to adjust production downwards by a total of 1.7 million barrels a day — although the second set of adjustments, which took effect from 1 February, is still working its way through the system. As is usual, we shall be reviewing the market outlook for the coming quarter and on into the rest of the year at today’s Meeting, to see whether we need to make any adjustments to our market-stabilisation measures. May I remind you that we seek prices that are stable, sustainable and acceptable to producers and consumers alike. Only in this way will the oil market have a solid base upon which to grow and meet the rising levels of demand that have been forecast for the opening decades of this century.

Furthermore, we are watching developments on world stock markets, to assess their possible impact on the global economy and, in particular, on energy demand. Also, we remain concerned about the continuing weakness of the US dollar against other major currencies, notably the euro and the pound sterling, because this is having a significant effect on the purchasing power of oil-producing developing countries in many parts of the world.

Excellencies, ladies and gentlemen,

In recent months, the issue of climate change has risen higher on the international agenda, with much coverage devoted to its claimed association with fossil fuels. Let me state quite clearly that OPEC is as concerned as anyone else about environmental issues, since, understandably enough, the citizens of our Member Countries also desire a cleaner, safer world in which to live. This is in addition to their fight against poverty and their quest for improved socio-economic conditions. Each of us has an objective to look after our environment in the best way we can.

The global oil industry has a long history of successfully improving its environmental credentials, for both the production and the use of the world’s leading energy source. Our Member Countries have played a big part in this and it remains a priority for the future. For example, our Member Countries have invested billions of dollars over the past decades in flared gas recovery projects. This has represented a significant contribution to the reduction, by more than half since the early 1970s, of the amount of gas that has been flared through oil operations.

With regard to climate change specifically, OPEC collectively and our Member Countries individually devote a lot of time and effort to this issue. We are, after all, committed to reconciling the forecast rising use of hydrocarbons with a cleaner, safer global environment. We are well-represented in all the major meetings of the UN-sponsored climate change negotiations, participate in and, indeed, organise other conferences and seminars, and undertake many studies on climate change and the energy sector.

Last September, for example, OPEC held a joint roundtable with the European Union on the promising technology of carbon capture and storage. OPEC strongly believes that, if this pioneering response measure takes off in a big way, there will be huge benefits for the world at large, on both the energy supply and environmental fronts. Not only would the world be able to continue using its most commercially viable energy sources — oil and gas — in a carbon-constrained environment for decades to come, but it would also help increase the output from many mature fields.

Let me conclude with one final thought. We often hear about the impact of energy use on the environment. But far too little is said about the positive effects of a sound energy system on people’s day-to-day lives, especially in the poorer nations. For example, the provision of modern energy services means less smoke-filled dwellings, less carrying of heavy firewood, less deforestation, more efficient cooking, easier access to doctors, greater mobility for jobs, and so on. This is in the true spirit of the Johannesburg Plan of Implementation, which makes it clear that access to modern energy services can make a major contribution to sustainable development and the eradication of poverty.

Excellencies, ladies and gentlemen.

Let us now proceed with the Meeting.

Thank you for your attention.