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COMMITTEE HISTORY OF THE OPEC-IEA JOINT WORKSHOP

As both industrialized and developing nations come to rely ever more on fossil fuels, and particularly petroleum, there has been tremendous competition for this resource. This competition reached its peak with the oil crisis of 1973, thus paralyzing industrialized countries and impoverishing petroleum-producing nations, as the climbing price of oil deterred many from purchasing the black gold[1]. Oil has continued to dominate international relations, as producers and consumers alike become more environmentally conscious and more concerned about depleting global supply[2].

The Organization of Petroleum Exporting Countries (OPEC) and the International Energy Association (IAE) founded its joint workshop, to meet on an annual basis, in 2003[3]. Although various other producer-consumer conferences and workshops had been held by other groups throughout the years, this workshop in Vienna marked the first time OPEC and IEA engaged in dialogue regarding world oil policy and future developments[4].

This series of workshops has a rotating membership, inviting experts and representatives from a variety of specialties within the oil industry to address the workshop. Participants may come from any country affiliated with either the IEA or OPEC, to facilitate greater discussion between producers and consumers of oil. This workshop is focused on increasing dialogue among all interested groups, while assisting the IEA in the authorship of its World Energy Outlook publications. Non-governmental organizations, academics, country representatives, and state officials are charged with the task of easing dependence on petroleum, planning for the future of energy reserves, and enabling the development of alternative energy resources. Workshops are organized thematically, to ensure that each topic is given adequate attention.

Both OPEC and IEA are free to meet with other organizations and conferences in an effort to tackle the most pressing petroleum issues, and regularly do. OPEC works extensively with UNDP and the UN Economic Commission for Europe, while IEA frequently consults with the UNEP and OECD. IEA and OPEC contribute to the International Energy Forum (IEF), headquartered in Riyadh, Saudi Arabia[5]. The IEF has been instrumental in facilitating further progress between industrialized and petroleum-producing countries, and includes 50 nations and international organizations in its efforts to clarify oil market fluctuations[6].

While the international community has welcomed greater cooperation between OPEC and IEA, its record in coming to a satisfactory compromise over pressing petroleum issues has been mixed. “While it is clear from the recent exchanges between the two groups that OPEC and the IEA hold similar views on many topical oil market issues, there are still distinct differences in some areas, stemming from the fact that OPEC’s principal objective is to address the interests of oil-producing, developing countries, while that of the IEA concerns primarily oil-consuming, developed countries.[7]”

Agreement among the negotiating factions appears to be most elusive when discussing the determination of oil prices. OPEC nations maintain that consumer nations, along with international oil companies (IOCs), must undertake greater investment in downstream level of oil production, particularly in refining crude oil and creating cleaner products[8]. Non-OPEC receiving nations contend that OPEC nations must significantly increase the productivity of their oil fields in order to meet the rising demand for fuel[9].

The OPEC-IEA joint workshop has also led to substantial successes in oil negotiation as well. There is a greater understanding of both producers’ and consumers’ needs, which has allowed discussion of energy security, productivity levels, and the development of new energy resources to arrive at a new level of debate[10]. Due to these breakthrough discussions between OPEC and IEA nations, two developments – the creation of the Joint Oil Data Initiative (JODI) and the International Energy Forum (IEFS) – have positively altered international oil diplomacy.

The creation of the International Energy Forum (IEFS) evolved over the course of the 1990s, as producer-consumer dialogue became stronger and more frequent[11]. Yearly conferences of the IEFS generally include more than fifty countries and international organizations, where members gather to present positions on oil market concerns, and foster a sense of greater cooperation between groups[12]. The Secretariat is located in Riyadh, Saudi Arabia[13]. The 10^th International Energy Forum was held in April, 2006, in Qatar. Italy and China co-chaired the event, while 63 countries and 11 international organizations participated in the dialogue[14]. IEFS and its member countries provided the impetus for the creation of the Joint Oil Data Initiative.

Concluding that a major cause of friction between producer countries and consumer countries was the difficulty in obtaining accurate information regarding oil production and oil availability in OPEC nations, OPEC and IEA joined in creating the Joint Oil Data Initiative in 2001, along with five other organizations: the Asia Pacific Energy Research Centre (APERC), the Statistical Office of the European Commission (EuroStat), the International Energy Forum (IEFS), the Latin American Energy Organization (OLADE), and the Energy and Industry Statistics Section of the United Nations Division (UNSD)[15].

The main of objective of the JODI Initiative is to curtail oil price volatility on the global market. Heeding calls from critics that the obscurity of oil production statistics contributes to wild fluctuations in the petroleum market, the initiative asks oil-producing states to publish accurate oil production numbers[16]. Launched in June of 2001, during the 7^th International Energy Forum meeting, the Initiative began with a six-month trial period, in which individual countries would disclose both production and refinery levels for the previous two months[17]. Fifty-five nations submitted full reports on oil productivity. The exercise was deemed a success, as it provided a crucial first step towards greater transparency in oil negotiations[18]. Member countries would give their full assent to the creation of a JODI database, which would track production and demand, as well as the availability of a variety of fuels: Crude oil, LPG (protein and butane), gasoline, kerosene, gas/diesel oil, heavy fuel oil, and total oil[19]. At the fifth JODI conference in 2004, all member countries voted to make the data readily accessible to the public, further strengthening their commitment to greater transparency[20].

The first joint workshop held by OPEC and IEA took place in Vienna, Austria in 2003. The objective of this forum was to contribute to IEA’s World Energy Investment Outlook, to be published later that year[21]. Many positive developments were hailed by members as a solid step towards greater cooperation. Concerns about the capacity of oil reserves in meeting current global demand were assuaged, while the vast increases in technology, both in retrieving oil from a variety of terrains as well as refinery practices, will enable oil costs to remain at a stable level, while the development of oil reserves in non-OPEC countries in regions, such as Russia and the Caspian region, will decrease overall dependency on OPEC reserves[22].

However, there were many investment concerns that arose during this landmark first workshop. Delegates expressed apprehension over the stability of future growth prospects in the oil sector, as government policies and environmental constraints could curtail the current global demand for oil[23]. Also, because of the development of oil reserves outside of traditional OPEC regions, demand for OPEC oil is expected to decrease in the future[24]. In addition, OPEC nations assert that their ability to adequately invest in cleaner, more efficient technologies for extracting and refining oil are severely limited by the lack of financial resources at their disposal[25]. Finally, international oil companies are concerned that access to refineries is still limited by OPEC economies[26].

The Second OPEC-IEA Joint Workshop took place in Paris in 2004. While this conference also focused primarily on investment in the petroleum sector, more emphasis was placed on identifying constraining factors and reaching an understanding on how these challenges could be breached[27]. Reaffirming once more that OPEC reserves are fully capable of meeting global demand for several decades, discussions turned to IOC reservations on future growth prospects and alternative energy demand[28]. The majority of IOCs believe that future oil profits are dependent not on access to new oil reserves and regions, but on technological improvements to refining all forms of crude to usable fuels[29]. Discussion also focused on competition with other energy sources, most notably gasoline and LPG[30].

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[1] Belgrave, Robert. “The Uncertainty of Energy Supplies in a Geopolitical Perspective,” International Affairs (Royal Institute of International Affairs 1944-), Vol.61, No. 2. (Spring, 1985), p. 254.

[2] Ibid.

[3] Silva-Calderon, Alvero. “Welcoming Address,” OPEC Review: Energy Economics & Related Issues, Sept 2003, Vol 27, Issue 3, p. 173.

[4] Ibid.

[5] Stanislaw, Joseph A. “Energy Competition or Cooperation: Shifting the Paradigm,” Economic Perspectives, Vol 9, No. 2. May 2004.

[6] Paul E. Simons, Deputy Assistant Secretary for Economic and Business Affairs, U.S. Department of State. “US Energy Security through International Partnerships.” Retrieved 10 July 2006

[7] Dr. Adnan Shihab-Eldin, 18^th World Petroleum Congress, Johannesburg, South Africa, 28 September 2005. Retrieved 3 July 2006.

[8] Ibid.

[9] Ibid.

[10] Ibid.

[11] Paul E. Simons, Deputy Assistant Secretary for Economic and Business Affairs, U.S. Department of State. “US Energy Security through International Partnerships.” Retrieved 10 July 2006

[12] Ibid.

[13] “Welcome to the Website of the International Energy Forum,” International Energy Forum. Retrieved July 11, 2006 from www.iefs.org.sa/default.aspx

[14] “IEF Overview,” International Energy Forum, 2006. Retrieved July 11, 2006 from http://www.10ief.com.qa/ief/web.nsf/web/overview_ief

[15] Joint Oil Data Initiative: Project on Monthly Oil Statistics, UNSD. (2006). Retrieved July 11, 2006 from http://unstats.un.org/unsd/energy/jodi.htm

[16] Ibid.

[17] “About JODI: The Initiative,” Joint Oil Data Initiative, JODI (2005). Retrieved July 11, 2006 from

www.jodi.org/fileZ/ODTmain.htm

[18] Ibid.

[19] “The JODI World Database: Products,” (2005). Retrieved July 11, 2006 from

www.jodidata.org/filez/ODTmain.htm

[20] “About JODI: The Initiative.” Joint Oil Data Initiative, JODI (2005). Retrieved July 11 2006 from

www.jodi.org/fileZ/ODTmain.htm

[21] “Introduction.” OPEC Review: Energy Economics & Related Issues, Sept 2003, Vol. 27 Issue 3, p.171

[22] Nordine Ait-Laoussine, “Reflections and remarks,” OPEC Review: Energy Economics & Related Issues, Vol 27 Issue 3, p. 171.

[23] Ibid.

[24] Ibid.

[25] Ibid.

[26]

[27] “OPEC’s Welcoming Address,” 2^nd Joint IEA-OPEC Workshop on Oil Investment Prospects, Paris, 28 April 2004. Retrieved July 11, 2006 from http://www.iea.org/Textbase/work/2004/opec/opening_shihab.pdf

[28] Smith, Michael. “Factors affecting investment decisions of international oil companies.” 2^nd Joint IEA/OPEC Workshop on Oil Investment Prospects, IEA News and Events. Retrieved 11 June 2006 from http://www.iea.org/Textbase/work/workshopdetail.asp?WS_ID=187

[29] Ibid.

[30] Ibid.