Address by Shri Mani Shankar Aiyar at the roundtable of ASIAN Ministers in Oil Economy
Round table focuses stability, security, sustainability through mutual interdependence
Following is the text of inaugural
speech delivered by Shri Mani Shankar Aiyar, Minister of Petroleum &
Natural Gas and Panchayati Raj here today at the "Roundtable of Asian
Ministers In Oil Economy" with the theme "stability, security,
sustainability through mutual interdependence": -
"Distinguished delegates of
the principal international organisations here present, our co-sponsor, the
Secretary-General of the International Energy Forum, the distinguished
representative of the International Energy Agency, and the distinguished Acting
Secretary-General of OPEC – the Organisation of Petroleum Exporting Countries,
My fellow-Minister, the distinguished Minister of State for External Affairs of
India, Shri E.Ahamed, Ladies and Gentlemen, Fellow Asians, We meet in the
shadow of the terrible Tsunami tragedy that has struck our shared continent of
Asia. Might I request you to please stand and observe a minute’s silence in
memory of the 125,000 or more who have been snatched so cruelly from our midst?
… Thank you.
This is a moment that might yet be
recorded as "historic" in the annals of regional cooperation in Asia.
For this is the first gathering together of the principal Asian ministers charged
with responsibility for the most crucial sector of the economy – petroleum and
natural gas. Whether our meeting today does get recorded as
"historic" does, of course, depend on the outcome of our
deliberations and of our resolve to persist on the path of such dialogue. I
have little doubt, however, that it will – for in the very act of journeying to
our capital you have registered your commitment to our shared destiny. Through
almost all of the advancement of human civilization, it is Asia that has been
in the vanguard. For the last few centuries, we fell to the sway of others.
Now, once again, are we the captains of our ship and the masters of our fate. I
thank you most warmly and sincerely, on behalf of our Government and all our
one billion people, for having done us the unforgettable honour of being
present here at the creation. Thank you, indeed.
Excellencies, in the sector of our
concern, hydrocarbons, the dawn of the 21st century heralds an
unprecedented, dare I say revolutionary change in international oil and gas
relations. In the last quarter of the last century, Asian oil producers came
into their own when OPEC secured fair and just remuneration for the most vital
element of growth and prosperity – oil. Now has come Asia’s turn to consume that
oil – and thus fuel the resurgence of Asia as the harbinger of the further
advancement of human civilization. The total consumption of the Asian countries
here present almost equals the total production of the Asian countries here
present. No longer are we laboring so that others might profit. We have already
emerged as the world’s principal source of supply; we are emerging as the
world’s principal destination for the consumption of that supply. Already, some
two-thirds of the fossil fuel that principal producers around this table
extract from the bosom of Mother Nature is bought by the principal consumers
represented at this very table. That trend will only accelerate as we traverse
the 21st century – the Asian Century. We are gathered here to rise
to that challenge and to avail of that opportunity.
The challenge, Your Excellencies,
lies in eschewing the errors of the past. The opportunity, Your Excellencies,
lies in fashioning a more fair, more just and more remunerative oil order for
all of us in Asia - in which the Asian producer is ensured a stable, secure and
sustainable return for a most precious but depleting natural resource, and the
Asian consumer is assured a stable, secure and sustainable regime within which
to promote progress and prosperity for that deprived one-half of humankind that
inhabits our shared continent of Asia. We commence here a dialogue to meet that
challenge and rise to that opportunity.
How do we do so? First let me deal
with stability. Last year has seen the worst roller-coaster ride in oil prices
for the better part of a generation. OPEC has behaved most responsibly through
this period of turmoil and turbulence. Instead of pursuing short-term
advantage, OPEC, led by its Asian members, has persistently striven for
moderating volatility and dampening speculation. For this, OPEC and its
membership have earned the world’s gratitude. Moreover, OPEC’s production plans
give the world the reassurance that global oil supply will keep pace with
booming global demand, and that over the next twenty years at least there will
be no market disequilibria to warrant any wild fluctuation in prices. If,
nevertheless, volatility rather than stability has marked international prices
in the last twelve months that is largely because of speculation and apprehensions
– that have been mostly belied – of the fallout on oil production of exogenous
political developments. The fact is that however uncertain developments in the
world political order have been, the underlying global oil economy has held a
steady course.
For us in Asia to convert that
underlying stability in production (and the prognosis for production) into
stability in oil markets, it is essential that we develop a sophisticated Asian
market for petroleum and petroleum products. That is how the West converted
their abundance of natural resources into abundance of production and
consumption. Unfortunately, we in Asia continue to behave as if we were still a
residual consumer of Asian oil production when, in fact, we are the principal
consumers.
Your Excellencies, for Asia to be
the residual consumer made some economic sense when there was large and growing
production on both sides of the Atlantic, on-land in the Americas and off-shore
in Europe. It was in that era that Western Texas Intermediate and Brent emerged
as markers. But as the world wheels into the 21st century, WTI
output is down by three-quarters compared to two decades ago and Brent output
is down by two-thirds compared to just a decade ago – and both are set decline
even further, and to decline quite precipitately at that. Meanwhile, it is
Asia, from Eastern Siberia through the Caspian, Central Asia and China, to
south-east Asia and to some extent even South Asia, and, of course, above all,
Iran and West Asia, that is booming in both the output and throughput of oil.
Yet, Asia has little in terms of a global marker. And even less in terms of a
well-prepared oil and oil products market. With a view to bringing about
greater stability in Asian trade in petroleum and petroleum products, can we
think in terms of an Asian market
·
where long-term contracts become longer,
·
where price discovery through the market is more
transparent,
·
where such transparency facilitates greater stability in
formulae for pricing in long-term contracts,
·
where spot purchases occupy a progressively larger share of
market transactions,
·
where petroleum exchanges are established and used,
·
where derivatives are integrated into market practice,
·
where, in short, an Asian marker emerges which reflects
Asian realities and the real role in the global oil economy of Asian
production, Asian consumption and Asian trade?
To pose the problem, Your
Excellencies, is easier than to find the answers. But I do submit, Your
Excellencies, that through sustained dialogue among ourselves, buttressed by
dialogue among our experts and market operators, we might be able to find an
Asian solution to the imperatives of Asian stability.
As for the second theme of our
meeting – security – the answer there too lies in promoting mutual interdependence.
Security has two aspects. One is security against unexpected disruption of
supplies. As a joint emergency response mechanism, perhaps we should consider
jointly building storages which would enable consumers to enjoy an
uninterrupted flow of supplies and producers to enjoy an uninterrupted flow of
oil revenue till normalcy is restored.
The second aspect of security
relates to assurance of markets for producers and assurance of supplies for
consumers. This calls for mutual interdependence through mutual investments in
each other’s countries by producer and consumer nations of the Asian oil
community. Hitherto, we have looked West for much of the investment in Asian
petroleum exploration and production, Asian petroleum refining, and Asian
petroleum marketing – and in saying so I include gas as well. Now,
increasingly, Asia itself is emerging as a significant source of investment in
Asia. Japan is, of course, a long-established Asian investor in other Asian
countries. China in the last decade, as also Malaysia, have become key players
in E&P in Asia and, indeed, the world over. So has India. We are already in
E&P, refining and marketing projects in more than ten countries and much of
our overseas investment is in Asia. Reciprocally, in refining, we in India have
been the beneficiary of investments by Iran in the Chennai Petroleum Refining
Corporation and of Qatar in LNG. These are but illustrative examples. A future
beckons in which Asian countries can become major participants in the massive
investments which need to be made in the Asian countries represented at this
table, running to an estimated 1580 billion dollars over the next 25 years in
upstream, midstream and downstream oil and gas development in all our countries
put together. Investment on this humungous scale, to the extent possible mutual
and reciprocal intra-Asia investment, would hugely enhance security of
production and consumption for all of us around this table, for all our
fellow-Asians, and, indeed, for all of humankind the world over. The oil and
gas sector in India welcomes the world with open arms, and reserves a
particular welcome for Asian investors. Equally, we stand ready to do our share
for the promotion of the global oil economy in general and the Asian oil
economy in particular. We believe we should continue and intensify this
dialogue in the interests of facilitating mutual investments to ensure mutual
security.
The third great theme of our
meeting today is sustainability. It has taken millions of years, indeed,
hundreds of millions of years for Nature to create and store what we have
substantially exhausted in a mere one hundred years or so. What remains we can
use only if used with great care. That calls for conservation, on the one hand,
and technology, on the other. Japan has shown the way to both conservation and
the technology for conservation, as perhaps no other country in the world has.
India has had no alternative but to conserve and innovate, although we still
have a long, long way to go. China has taken significant initiatives. So has
the Republic of Korea. Asian oil exporting countries have demonstrated a
commendable awareness of the importance of sustainability. The time now is for
us to pool together our experiences, forge them into a shared, common
experience, and build on that experience in concert. Sustainabilility in Asia
calls for sustained dialogue among Asians. We stand ready and willing to place
our Petroleum Conservation Research Association, the Indian Institute of
Petroleum, the University of Petroleum Studies, The Energy and Research
Institute of India (TERI), our Centre for High Technology, our Oil Industry
Safety Directorate, Indian Oil’s R&D Centre, and all our other scientific
and technological research and development institutions at the service of all
Asia. It is said that one in every three Information Technologists in the world
is an Indian. Our achievement in petroleum technology is perhaps less
spectacular. But we would be more than happy to share what we know with our
fellow-Asians – and even more to learn from others, above all to learn from our
fellow-Asians.
As we embark on this historic
initiative which will, I hope, bring us together frequently, even up to once or
preferably twice a year, perhaps alternately in a net oil exporting and a net
oil importing country of Asia, and perhaps progressively expanding our ambit
while keeping our core intact, I welcome all of you once again to our national
capital and wish you all a pleasant and fruitful stay in our midst."
RCJ/KC / inaugural address in oil
economy /6.1.05
(Release ID :6321)