OPEC calls for peace with Iran to settle oil prices

Madrid, July 1 (DPA) The Organisation of Petroleum Exporting Countries (OPEC) Tuesday set the steadying the US dollar and the easing of tensions between the West and Iran as key conditions for stabilizing oil prices.

High oil prices were not caused by a lack of supplies, OPEC President Chakib Khelil said at the 19th World Petroleum Congress in the Spanish capital Madrid.

There were enough reserves to meet the market demand for the next 50 years, said Khelil, who is also the Algerian energy minister.

OPEC countries were investing $120 billion upstream to increase their production by four million barrels per day by 2012, according to the Khelil.

The OPEC chief attributed the high oil prices to the devaluation of the US dollar and accompanying market speculation, the geopolitical situation including the tension between Iran and the West, and the impact of bioethanol which had lowered diesel production.

There was a perception by the market that some oil producing areas could be affected by a 'war risk,' he explained.

'This is not an issue of supply,' Khelil insisted. 'Unless we address the real causes, we will not see lower oil prices.'

There was 'a need to do something about geopolitics and the dollar,' he added.

The dollar would become devalued even more if the European Central Bank raised interest rates, further affecting oil prices, Khelil observed.

The OPEC chief denied that the cartel 'set oil prices,' insisting they were determined by the market.

High prices were not in the interest of producers, because they risked destroying demand, Khelil explained.

Oil supply and demand will be close over the next five years, the International Energy Agency (IEA) meanwhile said in a report presented at the Madrid congress.

Falling demand will help to ease the oil market, but it will tighten again towards 2013, IEA Executive Director Nobuo Tanaka said.

Tanaka expressed concern over the effect cutting fuel subsidies was having on poor people in developing countries.

He called on governments to accompany such cuts with measures to help the poor, and on international financial institutions to adopt policies to that effect.

IEA head of oil market division Lawrence Eagles denied claims by producer countries and some European politicians that market speculation was a major reason for soaring oil prices.

If speculators were pushing prices upwards in the long term, 'we should see the market show an imbalance,' which was not happening, Eagles said.

The IEA was concerned about the decline of mature oil fields, Eagles said, but added that new projects in countries such as Brazil, Russia or in the Gulf of Mexico could add to future supplies.

Christophe de Margerie, president of the French oil giant Total, said the company was on the verge of signing a service contract in Iraq, but was not expecting to make major investments there until after next year.

The World Petroleum Congress, one of the main events in the oil industry, was bringing together thousands of delegates from more than 50 countries from Monday to Thursday.

Developed countries declarations on climate change 'make no sense': India

New Delhi, July 2 (IANS) Industrialised countries should meet their own commitments in the fight against climate change rather than asking countries like India and China to cap greenhouse gas (GHG) emissions, the prime minister's principal negotiator on climate change Shyam Saran said here.

A week before leaders of 16 major economies - including India - are expected to sign a declaration underscoring the importance of fighting climate change, Saran told IANS in an interview that emission reduction targets being announced by developed countries meant nothing in the absence of a baseline year from which to measure the reductions.

As agreed in the United Nations Framework Convention on Climate Change (UNFCCC), '1990 must be the baseline year' from which GHG emissions would be reduced, Saran said. 'We'll resist any unilateral attempt to try and change the baseline to some future date.'

Declarations by developed countries to halve GHG emissions by 2050 'make no sense' without a baseline, he pointed out. 'It will only confuse world public opinion. It may make them think you are doing something very major, which you actually have no intention of doing,' Saran told IANS.

Saran also wanted industrialised countries to draw out the path they would follow to their 2050 goals. Otherwise, 'how do we know whether this is a credible target? Especially, taking into account the fact that most major countries are unlikely to meet their current (2007-2012) commitments'.

Answering criticism on why India was not committing itself to capping GHG emissions, Saran said: 'To merely ward off pressure, we don't want to announce targets which we have no intention of achieving.

'We'd like industrialised developed countries to meet the obligations they have undertaken before they start pointing fingers at countries like India.'

Saran acknowledged that there had not been much progress in international climate change negotiations since the UNFCCC summit in Bali last December, but was hopeful of agreement by the end of 2009.

Asked about fears of Indian industry that exports to developed countries would be subject to carbon tariffs, Saran said: 'That would be trade protectionism under a green label. And that, of course, we're not prepared to accept.

Saran expected next week's major economies' meet in Japan to deliver a strong message to climate change negotiators that their leaders 'consider this to be a matter of great urgency and importance.'


Excerpts from the interview:

Q: Many developed countries are making large-scale GHG emission reduction promises into the future. Is India doing anything to hold them to the current (2007-2012) targets?

A: Number one, India has categorically asserted that in the UNFCCC (United Nations Framework Convention on Climate Change), 1990 must be the baseline (year for GHG emission quantities). That was accepted even in the Kyoto Protocol. Therefore, we'll resist any unilateral attempt to try and change the baseline from 1990 to some future date. This is something that will go against both the letter and the spirit of the UNFCCC. That is our position.

Q: Is there widespread support for India's position?

A: In the negotiations that have been taking place post-Bali (the last UNFCCC summit in December 2007), at Bangkok, at Bonn, and most recently at the major economies meeting in Seoul, we've made this point very strongly. We've said you have stated that there should be 50 percent reduction by 2050. But unless you tell us which baseline you are using, it makes no sense.

Therefore, first of all, if we're not to merely put up a political target, but something which has substance, then it is important to know what is the base year from which you will have the cut. We'd like a clear assertion that this will be with 1990 as the baseline. Otherwise, it makes no sense. It will only confuse world public opinion. It may make them think you are doing something very major, which you actually have no intention of doing.

The second thing is, we have said that if you want 50 percent reduction by 2050, you must tell us what is the pathway that you will follow. Unless you tell us what your interim targets are, say by 2020, or what reductions you are ready to take post 2012, which is the second commitment period (for the Kyoto Protocol), how do we know whether this is a credible target? Especially, taking into account the fact that whatever targets were laid down by yourselves for the first commitment period (2007-2012), it is unlikely that most of the major countries will achieve it.

We do not want mere tokenism. With respect to the criticism why India is not announcing a target, we'd like to be quite clear and honest. To merely ward off pressure, we don't want to announce targets which we have no intention of achieving. So, we'd like the others, especially the industrialised developed countries, to deliver on the commitments they have made. We have not imposed those commitments. They have undertaken certain solemn commitments and, therefore, we'd like them to meet the obligations they have undertaken before they start pointing fingers at countries like India.

Q: What do the developed countries say when you tell them this?

A: That is the subject of negotiations. After Bali, we have had one round of talks in Bangkok, another in Bonn, and I must say we've not made much progress. We hope that by the time we come to the Copenhagen meet (December 2009), we'd perhaps have some very definitive targets for developed countries.

Q: Industry bodies here have expressed the fear of having carbon tariffs imposed on exports to developed countries. Have you discussed this at multilateral forums?

A: We've made it very clear that concepts such as competitiveness, trade or tariff regimes have no place in the context of the UNFCCC. So you cannot say that I'll follow a mitigation strategy but only if my trade competitiveness is intact. You hear this argument being used, that we must have a level playing field. We're already beginning with a very uneven playing field. Now, you are opening the door to trade protectionism under a green label. And that, of course, we're not prepared to accept.

Here also, we're on very strong ground, because the UNFCCC does not talk about trade competitiveness. They don't have a place in these negotiations. So to try and bring this in at this stage of the negotiations is really trying to deflect attention from the main issue. The main issue is that unless those who have been responsible for global warming which is taking place today, which is because of their accumulated emissions, unless they take the lead in bring about very significant and deep cuts in their emissions and changing their production and consumption patterns, looking at other issues is basically a distraction.

Q: What do you expect at the next week's meet of major economies in Japan?

A: We've met in Seoul and finalised a declaration. It will put across a very strong message that these leaders of major economies are deeply concerned about the challenge of climate change and are also convinced that unless there is a global effort we'll not be in a position to confront this challenge. So the major economies, which represent about 80 percent of the global GDP, have a common vision. The major economies will be giving a kind of political push to the multilateral negotiating process. The negotiators will get a clear message that their leaders consider this to be a matter of great urgency and importance.