Opening Statement by OPEC Conference President to the 3rd Meeting of the EU-OPEC Energy Dialogue

Delivered by HE Dr. Edmund Maduabebe Daukoru, President of the Conference & Minister of State for Petroleum Resources of Nigeria. Brussels, 7 June 2006

Excellencies, ladies and gentlemen,

On behalf of the OPEC Delegation, I should like to thank His Excellency Dr Martin Bartenstein for his warm words of welcome. I should also like to express my appreciation to all those people from both organizations who have worked so hard to organise today’s meeting — in the case of the EU, under the direction of His Excellency Mr Andris Piebalgs, the European Commissioner for Energy. I am, moreover, delighted to have the opportunity to meet His Excellency Mr Mauri Pekkarinen, the Minister of Trade and Industry of Finland, which will assume the Presidency of the EU on 1 July.

When I met Dr Bartenstein earlier this year in Vienna, shortly after Austria had assumed the EU Presidency, we reflected upon the good progress that had been made with the EU-OPEC Energy Dialogue up to that time. Dr Bartenstein assured me that Austria would intensify this process during his country’s Presidency. This was especially pleasing to me, because Austria has been the host nation of the OPEC Secretariat for more than four decades and we have enjoyed a cordial and constructive relationship throughout this period.

And so here we are today in Brussels, at the third meeting of the Energy Dialogue, and the President of the EU Energy Council has been true to his word! We need only look at the range of items on today’s agenda to see how far the dialogue has moved forward since the second meeting in December last year.

On the first anniversary of the dialogue this week, the topics before us relate to long-term strategies, the proposed energy technology centre, carbon capture and storage, energy policies, refining and the financial markets. This is in addition to reviewing developments in oil and energy markets — a sine qua non on such occasions as this.

These matters are all of high relevance to the oil market today and there are concrete plans within this Energy Dialogue to pursue them all in-depth — in most cases, with specific dates and venues.

Long-term strategy will be very much to the fore in today’s meeting, in the light of the EU’s release of its landmark green paper on a “European Strategy for Sustainable, Competitive and Secure Energy” three months ago. In reading through this important document, our analysts have identified many areas in common with our own Long-Term Strategy which was adopted six months earlier, with regard to the challenge of meeting rising energy demand in the future in a manner that accommodates the needs of socioeconomic development and is in harmony with environmental concerns.

However, there are aspects of the Dialogue where agreement is yet to be reached especially in respect of recent policy announcements. After all, there would be little point in holding this Energy Dialogue if there was total agreement on everything! The same is true with the dialogue into which we have entered with other stakeholders, notably China and Russia.

Thus the purpose of our Energy Dialogue is to see where we stand on particular issues, identify areas of common ground, discuss and seek to narrow differences, and find harmonious corridors of coexistence elsewhere.

Dialogue, of course, has been an ongoing process in other international fora since our last meeting in December. In some cases, these fora have provided opportunities for informal discussions between senior officials from the EU and OPEC, such as at the World Economic Forum in Davos in January and the Tenth International Energy Forum (IEF) in Doha in April. OPEC attaches great importance to the work of the IEF, as the main global platform for producer-consumer dialogue, and, like the EU, through Eurostat, has been heavily involved in the development and launch of the Joint Oil Data Initiative.

OPEC is also committed to meeting broader challenges facing mankind, in particular sustainable development and the eradication of poverty. Recently, top officials from the Secretariat attended the 14th Session on the UN Commission on Sustainable Development in New York, and we are monitoring the progress of this carefully as it enters its 15th Session.

Finally, let me say a few words about the current situation in the international oil market, because this provides the backdrop against which we will be conducting our meeting today.

Last week’s Ministerial Meeting in Caracas saw us extending the agreement we made a year ago at the 136th Meeting of our Conference, maintain the current OPEC-10 production level of 28 million barrels a day. We did this because, even though there is continuing volatility— a situation that concerns us greatly — the market remains well-supplied with oil, fundamentals are in balance and stock levels are comfortable. As is well-known, the present difficulties, which have been with us for around two years and are continuing to put pressure on crude and product prices, have been caused by ongoing tightness in the refining sector, geopolitical developments, speculative activity and other factors.

Against this background, OPEC has been doing its best to ease the situation, and will continue to do so. Our Member Countries have been increasing production — by around four million barrels a day since 2002 — and, where possible, accelerating plans to bring on-stream new production capacity to meet continued demand growth and re-establish a comfortable cushion of spare capacity. OPEC’s production policy has ensured that there should be ample production and spare capacity for years to come. We have also been paying greater attention to the downstream, by increasing investment at home and abroad — even though the refining sector is seen primarily as being the domain of industrialised countries.

All in all, we are not comfortable with prices at the present levels, because they are not supported by fundamentals and contain within them the seeds of further volatility. Extreme price levels, whether too high or too low, are detrimental to both producers and consumers. Our recognition of this fact underlines our longstanding commitment to market stability, so that consumers can receive their oil in an orderly, timely and efficient manner, as and when they need it and at reasonable prices. This perspective also constitutes a central part of our deliberations in the EU-OPEC Energy Dialogue.

Thank you for your attention.