Excellencies;
Ladies and Gentlemen:
Let me begin with words of appreciation - to the State of Qatar and to the Emir, His Highness Sheikh Hamad bin Khalifa Al-Thani, for the kind hospitality extended to us. Although, unfortunately he is not with us, I should congratulate Mr. Al-Attiyah for his unwavering support of South-South as well as North-South Dialogue and Cooperation. His wise chairmanship of the 15th Session of the UN Commission on Sustainable Development held in New York last May is a tribute - not only to Qatar - but to all of us.
Let me also thank Ambassador Nassir Abdulaziz Al-Nasser for the invitation to attend this meeting. It certainly is a pleasure to address such a distinguished gathering.
Coming very early this morning from the airport, I was pleased to pass by several construction sites and to see the City of Doha spurting many new high-rise buildings with innovative architectural designs. This is a clear sign of a thriving economy and economic growth, as confirmed by all economic indicators of Qatar.
My statement will focus on some of the conditions necessary to harmoniously develop the oil and gas sector in the developing countries that aspire to become oil and gas producers.
Oil and Gas development for the newcomers
Being in a south-south dialogue on oil and gas development, and noting that I have been previously involved in the oil and gas industry for over 30 years of my career in Saudi Arabia, I would like to briefly share with you some thoughts about this complex industry. The complexity is reflected all along the production chain - from the field to the end-user. The complexity also stems from the diverse uncertainties inherent in the industry. As examples, I could mention the high exploration risk; the capital-intensive nature of the business; the long time-frame required for investment; and the reliance on advanced technology owned by developed countries. There is also the lack of predictability of oil markets, especially on the demand side.
Given the diversity of their economies, newcomers do not form a homogenous group. However, there are some common factors that could be highlighted. The challenges are great, but the opportunities are even greater.
First, oil and gas are exhaustible resources. And this, naturally, raises the question of long-term sustainability of the industry in a given country. Even with their endowment, OPEC Member Countries face this issue, although with a different time-frame. The concurrent diversification of the economy and rational development of the oil and gas sector could be a solution to carry the goal of sustainable development.
Second, an appropriate legislative framework is a must.
Oil and gas are natural resources under the sovereignty of the countries where they exist. We have many UN officials here that would recall UN General Assembly resolution of 1962, stating that “the right of peoples and nations to permanent sovereignty over their natural wealth and resources must be exercised in the interest of their national development”. The last part of this article provides a good principle for designing an appropriate legislative framework, which is essential for development in the oil and gas sector, as part of national development plans.
Third, there is a need to develop proper institutions. Examples would be parastatals to control and regulate oil and gas exploitation by operating companies. The establishment of an NOC (National Oil Company) should be considered.
Fourth, partnering with foreign companies. By working in partnership with international companies, which do not exclusively come from industrialized countries, host countries can have access to much needed technology and financing with minimized risk.
Fifth, capacity building is vital. Human resource development and institutional capacity building are vital to ensure the success of the oil and gas development process. Emphasis should, therefore, be placed on education and health.
Climate change and global warming
And as we talked about sustainable development, which most of you know has three pillars to it; social, economical and environmental. This brings another important dimension that must be considered in the development of the oil and gas industry; namely environment protection. It is a goal that goes beyond the rich-poor divide, particularly noting the findings of the Intergovernmental Panel for Climate Change indicate that the poor developing countries are the one that stand to suffer the most. Hence, oil and gas development should be done with environment consciousness. However, environment protection often carries a very high cost that may be beyond the reach of individual developing countries. And although South-South Cooperation is important, this is an area that instigates North-South Cooperation; particularly through areas like the Clean Development Mechanism (CDM) under Kyoto Protocol.
I am sure you will hear much more elaboration on all these points and more, from all the experts here, through the rich program of the meeting, over the coming two days.
OFID aims and record
Let me now put back my hat as Director-General of OPEC Fund for International Development (OFID). OPEC Member Countries have always supported the development of other developing countries, through many effective bilateral and multilateral channels. My institution, OFID, was established over 30 years ago in the spirit of South-South Cooperation. At the core of OFID’s mandate is financial support to non-OPEC developing countries, especially the poorest among them.
Over the years, OFID has committed more than US$9 billion in 121 countries, worldwide. Nearly half of OFID’s financing is devoted to Africa, to support poverty alleviating projects, and to build basic infrastructure that is needed for economic and social development. Today, OFID operates many financing windows, covering public and private sector loans, trade financing and grants. OFID is also active under the “Heavily Indebted Poor Countries Initiative” (HIPC) by providing debt relief through mainly debt restructuring and grants.
Our spectrum of support covers wide activities in the fields of health, education, transportation, agriculture, energy, and many other areas. Over the last 31 years, the energy share of our commitment has reached 20%. Recently, OFID is actively planning to increase the share of energy related projects, with future commitments going to low income countries, noting the fact that energy plays a pivotal role for sustainable development and the achievement of the Millennium Development Goals.
Year after year, OFID have been working to expand support and introduce new and innovative ways for financing and co-financing. We have a close relationship with many national, regional, and international development assistance funds and agencies, in order to coordinate and streamline our activities, and assure the best use of available resources.
Conclusion
Our wish is that the great things accomplished in, and through, the petroleum industry of producing countries, could radiate through Africa and other developing countries around the world; driving economies forward and opening up new opportunities for all.
Thank you.