International Energy Forum seeks transparent oil markets

17:02, April 01, 2010      

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Energy producers and consumers who attended the International Energy Forum are calling for transparent oil markets in an effort to tackle price volatility.

"This is the first time that the IEF has approved a ministerial declaration and it is a great honor for Mexico to be the scene of this encounter," Mexican Energy Secretary Georgina Kessel Martinez said Wednesday during the plenary session of the 12th International Energy Forum in the resort city of Cancun.

"I have no doubt that we are going in the right direction thanks to this unprecedented declaration," Martinez said.

The ministerial declaration, signed earlier Wednesday by the ministers of the countries participating in the forum, calls on the IEF secretariat to draft a charter for the organization, including a formal mission statement, membership provisions, financial support structures and charter participation rules.

The IEF's High Level Steering Group was to begin drafting the charter after the two-day Cancun meeting ended Wednesday, with the idea of approving the document at a ministerial meeting at the IEF secretariat in Riyadh, capital of Saudi Arabia, in March 2011.

The forum, which considered environmental issues and oil prices, drew representatives from 64 countries and 16 international organizations. The gathering sought to achieve oil price stability via transparent markets and large amounts of market data.

Oil producing nations also pushed to promote carbon capture technology and called for investments by wealthy nations.

"In the 21st century there will be a major transition," Mexican President Felipe Calderon told the opening session of the IEF forum on Tuesday.

"We now has an opportunity to create a new industrial revolution. We are seeking energy security and environmental sustainability," he said.

Most officials support the Joint Oil Data Initiative, a database that is updated monthly and includes the top 30 oil producers and consumers.

Officials said the JODI seeks to provide transparency in order to stablize oil prices and reduce opportunities for speculation.

Both oil producers and consumers hope to prevent a repetition of the rollercoaster ride of oil prices in 2008.

"In 2008, a loss of communication between parties allowed the situation to be hijacked," said Bin Salman, Saudi Arabia's assistant oil minister.

In the first half of the year "it was hijacked by people who said that oil prices had gone to 150 U.S. dollars a barrel and it can go to 200 dollars. This same market was hijacked by doom and gloom sayers that took it down to 35 dollars by the end of the year," he said.

Oil prices skyrocketed to 150 dollars a barrel in 2008 because investors bought oil contracts seeking a place of safety as the U.S. endured a severe financial crisis. When the crisis spread from financial markets to the rest of the economy and to the rest of the world, investors were forced to sell, triggering a price crash. Key contracts ended the year at close to 30 dollars a barrel.

However, some people still believe in a close link between financial and oil markets.

"Transparency will shed a better light on things but I do not see a clear solution to the problem," Alfred Maier, head of the energy and mining department of Austria's economy ministry, told Xinhua.



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