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Comments to the Jeddah Energy Meeting.



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Minister for Resources and Energy, Minister for Tourism

COMMENTS TO THE JEDDAH ENERGY MEETING

** CHECK AGAINST DELIVERY **

In the face of growing concern about the global petroleum market, I thank the Kingdom of Saudi Arabia for

bringing together producing and consuming nations, and the industry, in Jeddah today.

Saudi Arabia is playing a very constructive role to stabilize the world petroleum market and to mitigate any

damage to the global economy, especially the economies of the developing countries.

Like other countries, the Australian community and our industries are feeling the impact of record oil prices.

As we all know, however, there is no simple solution to the problem of record oil prices and no one nation can

shoulder the burden on its own.

The Australian Government is promoting policies that:

• Encourage oil exploration in new frontiers

• Produce more of our vast coal, gas and uranium resources

• Accelerate the development and deployment of renewable and clean energy technologies

• Promote greater energy efficiency, and

• Build industry capability through education and training

Australia is also engaged in industry capacity-building in Timor Leste where the successful exploitation of its

petroleum resources is vital to the future of this new nation.

We are here today to try to achieve international cooperation to find ways to balance supply and demand in a

more sustainable way.

In that spirit, Australia is hoping for cooperation to:

1. Ease foreign investment restrictions and promote open and transparent investment frameworks around the world

The Hon Martin Ferguson AM MP

The H

on Martin Ferguson AM MP

22 Jun 2008

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2. Engage with OPEC countries to encourage investment in additional production capacity and more efficient production technology

3. Improve petroleum market data transparency

4. Engage with developing countries and the International Energy Agency to address the difficult issue of fuel subsidies and associated budget, balance of trade and inflation pressures, and

5. Consider refining and other options for increasing global middle distillate output - diesel, jet fuel, and kerosene

About 85 per cent of the world’s oil reserves are largely unavailable for international commercial investment.

An important role for governments is to remove impediments to open investment and trade to allow the

efficient operation of the global market.

At the same time, governments are entitled and indeed obliged to ensure a fair return for their people from the

exploitation of their resources through appropriate regulatory and taxation arrangements.

Although Australia is a relatively small producer, we have sought to create a regulatory and taxation

environment that is conducive to timely development.

In the first instance, we need to work with the national oil companies in OPEC countries and encourage

commercial investment in additional production capacity and more efficient production technology.

There is also a need to improve the quality of data that is available about reserves in OPEC countries and

demand in the rapidly growing economies such as China.

We could work together to improve the coverage and quality of oil market data provided through the Joint Oil

Data Initiative.

While OECD countries are responding to the oil price impact with contracting demand, there is still strong

demand growth in non-OECD countries, driven by GDP growth, with the price impact partly shielded by

subsidies.

We would like to congratulate those countries that have taken recent action to cut fuel subsidies, in particular

China last week.

It is the middle distillate portion of the crude oil barrel - diesel, jet fuel and kerosene - driving the

unprecedented growth we are seeing in China, India and the developing world.

Demand for these fuels is growing much faster than for other refinery products and refineries around the world

are operating at full capacity for their production.

Further investment in diesel refining capacity is urgently needed.

Middle distillates are also the fuels produced in gas-to-liquids and coal-to-liquids processes and it is important

that the next generation of these technologies be accelerated to reduce their cost and improve environmental

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performance.

These are just some of the areas we have to confront as a global community.

The success of peaceful globalisation in the 21st century depends on the free flow of resources and energy, capital, skills and labour, and open engagement within the community of nations.

Today's meeting is the start of what will be an ongoing dialogue and Australia looks forward to working

constructively within this process.

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