Introductory remarks by State Secretary Raymond Johansens, Ministry of Foreign Affairs.

Geopolitics and Energy in Eurasia

Seminar co-arranged by the Norwegian Ministry of Foreign Affairs and the Norwegian Institute of International Affairs (NUPI) Tuesday 6 December at NUPI, Oslo

Ladies and gentlemen,

I am honoured to be invited to open this seminar on Geopolitics and Energy in Eurasia. The broad attendance shows that this topic is widely recognized as important. I am very pleased that NUPI and the Ministry of Foreign Affairs have been able to attract such prominent speakers. I want to thank Director Sverre Lodgaard and his team for excellent cooperation in preparing the seminar.

Energy is one of the mainstays of our society. The energy issue is far more than a question of what we pay at the petrol station or for heating our homes. Energy is politics at all levels of society: locally, nationally, regionally and globally. It has been shown again and again that the energy question can only be resolved in an international setting and through cooperation.

Let’s take a look at China in the context of today’s topic. China’s rise to its present position in the world economy has been spectacular. A growth rate of nearly 10 per cent over a period of 20 years has made its mark on the global economy. In its first Economic Survey of China, published this September, the OECD was very upbeat on the future prospects of the Chinese economy. The OECD scenario is in line with the Chinese authorities’ own target of a fourfold increase in GDP in the period 2000 to 2020. If this materialises, the impact on the world economy will be enormous.

In 2003 China became the second largest oil importer in the world, after the USA. The availability of energy has now become the key factor determining whether the growth target will be met. Failure to meet the target could have far-reaching consequences for economic and social development in China.

Chinese authorities are evaluating a long range of measures to increase secure energy supply both domestically and internationally, while working to increase energy efficiency and cut energy costs per unit. The aim is a 20 per cent increase in energy efficiency by 2010. Chinese oil companies have greatly expanded their activities in many parts of the world underscores this concern of energy security.

The Chinese situation is not unique. At present energy is in great demand worldwide. According to the International Energy Agency’s “World Energy Outlook 2004”, the Earth’s energy resources are more than adequate to meet demand until 2030 and well beyond. What is worrying is that short-term threats to energy security will increase. Major oil and gas importers – including most OECD countries, China and India – will become even more dependent on imports from distant, often politically unstable parts of the world, primarily Middle Eastern members of OPEC. Russia, with its large reserves, will take on an even more important role as supplier. Exporting and importing countries will become increasingly dependent on each other. The risk that wells or pipelines could be closed or tankers blocked by piracy, terrorist attacks or accidents will increase markedly.

The questions raised by the IEA encompass the most pressing challenges facing China and the rest of the international community, including Russia and Norway.

As for China, what strategy has it developed to meet its energy demands and ensure energy security? Today most of Russia’s petroleum exports go to Europe, but it has an interest in opening new markets. The question is whether Russia will channel more of its energy resources to the East, to China and Japan? And what strategies does it have for energy production and transport from Northwestern Russia? The Barents region is becoming a geopolitical arena where energy is set to be the most important dimension. Could energy supply from this region play a role in meeting China’s energy demand? (Indirekte vil en økning av energiproduksjonen også komme Kina til gode da det kan øke deres tilgang fra andre kilder)

Asking questions is of course easier than finding answers. The questions are, however, already on the international agenda, and there is an urgent need to find the answers. The environmental dimension is another extremely important issue. It goes without saying that environmental concerns must be addressed in relation to the question of economic growth. The Chinese in particular are becoming increasingly aware of this.

The presentations by Dr. Li Guofu and Dr. Andrey Kozyrev and the comments of the panel of experts will cover some of the issues I have raised in this brief introduction. Their input will, I am sure, be very interesting and provide valuable food for thought.