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Oil producers look for way out of crisis

BY ALECIA D. MACKENZIE
SPECIAL REPORT FROM IPS NEWS

oilrig_optPARIS - With the price of crude oil down more than 50 percent from a year ago, and with U.S. President Barack Obama championing alternative forms of energy, oil producers are scrambling to find ways to protect their industry.

At the 10th International Oil Summit, held in Paris Thursday, government ministers, company executives and representatives of the Organisation of Petroleum Exporting Countries (OPEC) discussed ways of dealing with the current economic crisis and future challenges.

But no one at the conference seemed to have any clear idea on what steps should be taken, and many speakers went on the defensive, criticising Obama's plans to make the United States less dependent on oil, blaming consumer practices for harming the environment, and warning that low prices mean less funds to invest in alternative forms of energy.

"Even the brightest minds do not know what will happen in the next few years, making it hard to plan ahead," said Nordine Ait-Laoussine, a former energy minister of Algeria and chairman of the summit.

"It is clear that the oil industry is facing one of the sharpest downturns in its history," said Ait-Laoussine, referring to the current crude oil price of around 50 dollars a barrel, which has fallen from 116 dollars in mid-April 2008 and from a high of 147 dollars in July of the same year.

Several speakers at the summit stressed that the current low price of oil may adversely affect the development of "cleaner" sources of energy.

"Lower energy prices are not conducive to investment in alternative energy," said Mohamed bin Dhaen Al-Hamli, minister of energy in the United Arab Emirates.

On the same panel, Abdallah Al-Attiyah, Qatar's deputy prime minister and minister of energy, told of recently meeting a "high European official" at a conference who said he was unhappy with the low price of oil because European companies would not be able to subsidise bio-fuel.

Oil-producing countries are thus "blamed when the price is high, and blamed when the price is low," he complained. "I'm very confused. What should we do?"

Jeroen van der Veer, the CEO of Royal Dutch Shell and a keynote speaker at the summit, said that his firm is committed to looking at alternative sources of energy, including wind, but he stressed that oil and gas will still be in use for many decades, despite claims by scientists that fossil fuels contribute to climate change.

"Mother Nature put it there, and we take it out," he said, concluding that there was a place for all sources of energy in the world.

He added that it was up to governments to determine what sources of energy their people use.

"Oil companies do not determine the energy mix in the world," van der Veer said. "Governments determine the energy mix. They can tax oil so that people don't drive...they can build nuclear plants."

He also said that "better driving habits" could save fuel. He reminisced about driving a fuel-efficient Citroen "deux chevaux" when he was young, stating that "you don't need a Hummer to be happy."

The Hummer, marketed by U.S. auto company General Motors, is a military- style vehicle with high fuel consumption, but the brand is now up for sale.

Christophe de Margerie, CEO of French oil company Total, was optimistic that prices would rise in the long term, despite falling demand in member countries of the Organisation for Economic Co-operation and Development (OECD), a grouping of 30 wealthy nations.

He said Total's top priorities continue to be "safety, the environment and climate change." He added, "We have to think about other forms of energy and if it's cleaner than ours, let's do it."

But Total has been criticised by some non-governmental organisations for having operations in countries accused of human rights violations, such as Burma and Sudan.

Asked by IPS, on the sidelines of the summit, about Total's involvement in such countries, de Margerie replied, "My position is that what we're doing is good for the people in these countries."

Pressed on whether the presence of oil companies supports repressive governments, he said, "Ask the people there. I am proud of what we're doing because we help the people."

Christele Adedjoumon, who works with organisations to provide renewable energy to African villages, said she wasn't sure this was the case.

"Each year I go to Africa and nothing is changing," she told IPS. "We still have to convince the big oil companies to give even a fraction of one percent of their profits to contribute to clean energy projects in Africa."
She explained that in Benin, for instance, NGOs have been working on a project to get villagers to stop buying kerosene and to use the same amount of money for investment in solar energy. But the oil companies don't seem interested in supporting such initiatives, she said.

Royal Dutch Shell's van der Veer told IPS that his company certainly "thinks about human rights" in their investment decisions.
"It's a very complex topic. You have to look at human rights in your own company." Referring to Sudan and Burma, he said, "I stay away from them."

 

 

 

 

 

 

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