OPEC–IEA: harmony breaks the mould

OPEC Bulletin Commentary February 2007

Public perceptions are often at variance with behind-the-scenes reality.

History can also have a part to play — as can people’s inability, or even unwillingness, to move on.

Nobody would pretend that OPEC and the International Energy Agency see eye-to-eye on every issue.

They were, in essence, set up according to contrasting agendas. OPEC was established in 1960 to reflect the concerns of oil-producing developing countries, while the IEA was formed 14 years later to represent the interests of oil-consuming advanced economies.

But their patterns of development have not been restricted by the moulds in which they were created. Those moulds reflected contemporary values and concerns.

The oil industry has moved on since then, so much so that some people might say that the only thing in common between now and three or four decades ago has been the task of extracting crude oil from the ground, processing it and getting it to the consumer!

A visit to the OPEC Secretariat by IEA Executive Director, Claude Mandil on January 12 — featured in this issue — highlighted the convergence that has taken place between the two intergovernmental groups in many important areas in recent years.

As Mandil said during his visit, there was an increasing similarity in goals, “with both organisations striving to enhance the predictability, reliability and stability of the oil market.”

This has manifested itself in clearcut practical actions, reflecting the growing harmony between the two sides in handling issues affecting the world oil industry at large. All parties have benefited from this.

Timely high-level discussions, for example, greatly reduced the impact of Hurricane Katrina on already jittery international oil markets in 2005. Annual joint workshops provide important insights into key topical issues, such as investment and demand. Both sides have been active in the establishment and development of the influential producer/consumer dialogue body, the International Energy Forum, as well as of the groundbreaking associated Joint Oil Data Initiative.

On the environmental front, OPEC and the IEA agree that, since fossil fuels will continue to dominate the energy mix in the foreseeable future, clean fuel technologies must be better developed to address environmental concerns. Among these technologies is the considerable potential offered by carbon capture and storage. On top of this, OPEC is a member of the forward-looking IEA Greenhouse Gas R&D Programme.

Generally, informal exchanges of information on a wide range of energy and related issues facilitate the day-to-day activities of each group, in often unheralded but significant ways.

The enhanced relations between the two groups and the positive outcome of this are hardly surprising, bearing in mind the challenges they share in ensuring that consumers receive energy in a timely, sufficient and satisfactory manner in the future. Reputable forecasters agree that world energy demand will continue to rise for years to come, sharpening up these challenges and underlining the need for a sound, sustained process of dialogue and cooperation, involving all responsible parties.

As OPEC Secretary General Abdalla Salem El-Badri said at last month’s meeting in Vienna: “At the end of the day, there is no way we can reach our objectives unless we cooperate with each other.” He couldn’t have said it any better!

This Commentary is taken from the February 2007 edition of the OPEC Bulletin, which can be downloaded free of charge in PDF format from the OPEC website.

OPEC Bulletin (February 2007)

Download document