New charter consolidates OPEC’s drive for dialogue

OPEC Bulletin Commentary March 2011

The ceremonial signing of the IEF Charter in Riyadh on February 22 (see story on page 12) completed a process that had begun in a small, but determined way in Paris 20 years earlier. In doing so, it reinforced the credentials of an institution that had already achieved much success in promoting producer-consumer dialogue. OPEC, itself a firm believer in such dialogue, welcomes this.

It all began with a modest Ministerial Seminar for Oil-Producing and-Consuming Countries on July 1-2, 1991, co-hosted by OPEC Member Venezuela. This evolved into the world's premier channel for high-level producer-consumer dialogue, the aforementioned International Energy Forum (IEF).

While the seminar attracted just 25 countries, including six OPEC Members and Ministers from four major industrialized nations, the signatories to the Charter numbered 86 energy-producing, energy-consuming and transit countries.

When the Paris meeting was held, the industry was in a state of transition after a decade of disturbing market reverses, peaked by the 1986 price collapse, and with the onset of major new challenges as the environmental debate gathered pace and the global political structure changed radically. As former Secretary General Dr Subroto put it on the eve of the 1990s: "Economically and technologically, we are living in a period of increasing globalization, where interdependency is vital to the manageability of all our societies. Progress in any field depends upon the willingness and ability of nations to cooperate with each other to achieve mutually beneficial solutions."

OPEC's earlier calls for dialogue had already resulted in significant advances in cooperation among producers in the late-1980s. But clearly more was needed - hence the Paris meeting, which was quickly hailed as a breakthrough.

Current Secretary General, Abdalla Salem El-Badri, told the Extraordinary IEF Ministerial Meeting on February 22 that OPEC was proud to have played a role in the Forum's development: "The IEF has come a long way in the past 20 years. Those early ad hoc meetings of producers and consumers have now been replaced by more focused workshops and ministerial forums. At the same time, however, the informal nature of the dialogue has remained. The IEF now has its own Secretariat, here in Riyadh, which is also home to the important Joint Oil Data Initiative. Following the Cancun Declaration, we have witnessed, over the past year, the formulation of an IEF Charter and the development of agreed activities between the IEF, the International Energy Agency and OPEC."

He added that the informal dialogue had become an essential ingredient to ensure market stability, improve transparency and provide greater predictability, and that OPEC remained committed to it. At the same time, however, he stressed: "It is essential we continue to work toward the proper and full implementation of the agreed-upon areas of cooperation. Our efforts should be dedicated to this, so that we can fully achieve what was laid out in the Cancun Ministerial Declaration."

This is getting to the heart of the matter. It is not enough to live on past glories or to make bold statements about the future. The ultimate success of any institution is measured by its present operations and its attention to the future.

This is especially true in the oil sector where the French saying is particularly apt: "Plus ça change, plus c'est la même chose (the more things change, the more they remain the same)." While things may change on a day-to-day basis in the market - sometimes significantly, as we have witnessed recently - the fundamental challenges are timeless. These were defined by OPEC half a century ago and remain as cogent and as valid today: stable prices, steady income, secure supply and fair returns on investment.

Indeed, the challenges facing the industry have multiplied in today's more globalized, interdependent world. Our Heads of State and Government recognized this in signing OPEC's 2007 Riyadh Declaration, in the shape of three guiding themes for future decision-making: stability of global energy markets; energy for sustainable development; and energy and environment.

A sound process of dialogue is essential if the industry is to respond effectively to these challenges as demand grows in the coming years, and the Riyadh meeting last month witnessed another important step in this direction.

OPEC Bulletin March 2011

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