; Speech by Ms Buyelwa Sonjica, MP, Minister of Minerals and Energy
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Speech by Ms Buyelwa Sonjica, MP, Minister of Minerals and Energy

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Speech by Ms Buyelwa Sonjica, MP, Minister of Minerals and Energy

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									Speech by Ms Buyelwa Sonjica, MP, Minister of Minerals and
    Energy, South Africa, at the Jeddah Energy Meeting in
                           Saudi Arabia
                           22 June 2008

Our host, H.E. Mr. Ali I. Al-Naimi, the Minister of Petroleum and
Mineral Resources in Saudi Arabia

Fellow Ministers from both petroleum producing and non-
producing nations

Representatives from the international petroleum industry

Honoured Guests

Ladies and gentlemen



Let me begin by thanking the Custodian of the Two Holy Mosques
King Abdullah bin Abdul Aziz Al-Saud, for convening this important
meeting.

It is my honour and privilege to address you at this august
international gathering. The unacceptably high and volatile crude
oil prices have adversely affected all the peoples of the world –
rich and poor. It has resulted in huge and sporadic protests in the
developed north, whilst in the same vein, inflicting severe pain and
devastation to billions of peoples resident in the developing south.

This situation is further exacerbated by soaring food prices,
creating a double edged sword especially for the poor. The world
presently faces one of its most difficult economic periods since the
1970s. Many countries are facing slowing growth and rising
inflation, a phenomenon not commonly seen in the past three
decades. The peoples of Africa are especially vulnerable and their
suffering is the most severe of all.

Rising economic growth combined with a long period of
reasonable oil prices have resulted in demand for oil and energy
rising considerably since 2001. The growth of China, India and
other emerging markets has seen demand rise considerably since
2001. In 1986, China consumed 2 million barrels of oil per day
(compared with about 16 million barrels per day in the United
States at the time.) By 2006, China was consuming more than 7.4
million barrels per day. In India, oil consumption has risen from
just over 1 million barrels per day in 1990 to 2.63 million barrels
per day today.

Crude oil is a hydrocarbon that must always be within reach. It has
to be at levels that will make it accessible and sustainable to the
benefit all nations who depend on it, thus mitigating against energy
poverty.

The problem with the price increase is its secrecy and the non
transparency. What is the actual factor or factors that affect the
price? Is it growth, speculators or geopolitics? All is it a
combination of these three at play at the same time?

We hear that diminishing supply is a factor that influences the price
hike. However, the volatility in the rise of the present oil prices
cannot simply be explained by mismatches in supply and demand.
The fact that pension funds now see commodity indices as a
tradable commodity means that the door has been opened to
speculators having an undue influence on commodity prices.
This meeting could not have come at a better time. It is a response
to my repeated, publicly expressed, frustration that in the world
today, there is a paucity of platforms to debate and challenge
these anomalies. We are pleased that the government and the
peoples of this kingdom – one of the largest oil producing countries
- have taken note and decided to provide us with a platform to
debate and perhaps take the necessary corrective decisions.

In my opinion, the world cannot absorb a further increase of a
similar magnitude without a serious reduction in economic growth.
Such a scenario would be of benefit to no one, especially not to oil
exporting countries. It is incumbent upon oil exporters to use some
of the oil revenue to invest in development in oil importing
countries so that these imbalances can be mitigated and that
global growth can be achieved on a more equitable basis.

Those of us in Africa, who have to face - on a daily basis - the
reality and the ignominy of poverty and underdevelopment, have
an interest in an outcome that will create certainty and stability. We
need stability of prices as well as the transparency in the pricing
system to allow for proper planning. This, we believe, will have a
positive impact, particularly, to the people of the developing world.

Having said all this, we are mindful of the reality that crude oil is a
finite resource. We need to use it efficiently, effectively and
sparingly. It is a non-renewable source.

We want to thank, once again, the government and the people of
this great kingdom for organising this important gathering. I want to
join my colleagues in applauding our host, H.E. Mr. Ali I. Al-Naimi,
the Minister of Petroleum and Mineral Resources in Saudi Arabia,
for affording us the opportunity to engage in objective and
constructive dialogue to address these unprecedented high and
volatile oil prices.

This gathering has brought under one roof, people who have the
means to provide a solution. It is quite clear that unless drastic and
bold interventions and sacrifices are made we are going to be in
this untenable situation for many years to come. Having said this,
however, let me express my appreciation to all the delegates in
this auditorium for choosing to be part of those who are searching
for a solution!

We trust that out of this meeting, will emerge a global community
of consensus marked by stability, certainty and predictability.

Most importantly it will come up with a solution that will give hope
to the billions of our people. They are watching in anticipation of an
outcome that will deliver them from further impoverishment that
some governments, especially in Africa, do not have financial
capacity to mitigate against.

I thank you.

Ends


Sputnik Ratau
Media Liaison Officer: Ministry
Department of Minerals and Energy
Tel.:+27 12 317 8291
Fax:+27 12 322 8699
Cell: +27 82 521 9614
E-mail: sputnik.ratau@dme.gov.za

								
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