EU sets OPEC minds at ease over oil demand

Representatives from the world’s leading oil producing countries said they were reassured that the EU’s future energy policies would not lead to a drop in demand.

Edmund Daukoro, Nigeria’s minister for oil representing the Organisation of Petroleum Exporting Countries, said that talks with EU officials on Wednesday had ended with “greater convergence of opinions” than when they started.

The delegation from OPEC met with EU energy commissioner Andris Piebalgs to discuss a wide range of issues, including the European commission’s green paper on energy supply, published on March 9.

OPEC is concerned that the commission’s commitment to “alternative” energy sources, such as wind power or biomass, could lead to a sharp fall in demand for oil, putting major investments at risk.

But Daukoro said that the dialogue with Piebalgs had clarified Europe’s position. “It is clear that so-called alternatives are seen as part of an overall energy mix, which still includes oil,” he said.

Austria’s trade minister Martin Bartenstein, representing the EU presidency, underlined Europe’s commitment to oil.

“The commitment to renewable energy, increased energy efficiency and combating climate change set out in the green paper will mean a decrease in the increase in oil consumption, not an overall reduction.”

Bartenstein also conceded that OPEC’s concerns about security of demand and the EU’s fears about security of supply were “two sides of the same coin”.

The current volatility of oil prices was also discussed, with OPEC in particular keen to stress the need for caution.

“Now is not a time for snap decisions about future energy policy, simply because current prices are high,” Daukoro said.

He also urged the EU to do more to curb the speculation over oil prices by hedge funds and other investors which he claimed was distorting the market.

OPEC has pledged to increase its capacity from 2.2 million barrels a day to three million in a bid to increase spare capacity and ease pressure on prices, but Daukoro warned that there was still “a downstream bottleneck” that was hampering supplies.

Piebalgs and Daukoro both stressed the need to increase investment in downstream –capacity, and announced a joint EU-OPEC study on investment needs in the refining sector.

They also agreed on a joint conference on carbon capture and storage to be held in Riyadh in September, and a new round table on energy policies planned for November.

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