Opening statement by ASG Feleti Teo at petroleum meeting
8 – 9 OCTOBER 2008

1. Dear distinguished colleagues and guests.
2. We are well aware that global oil prices have risen steadily over the last four years, hitting all-time highs and exceeding USD 140 per barrel in August this year. There has been some relief with reductions in international oil prices in recent months. These prices however remain high in relative terms with little evidence of them abating in the future.
3. The volatile and sustained high prices are severely affecting the incomes and lives of the region’s people. All economies, large and small, have experienced negative impacts to varying and unfortunately significant degrees. As a region of net-importing countries, this has translated into continuing stress on respective balances of payment, growing inflation and a worsening in the terms of trade.
4. Energy markets are dynamic. Oil and gas markets are said to operate in a global continuum. Put simply, all points in these markets are inter-connected. As you all know, events whether they be a hurricane, political instability in oil producing countries or simply a rumor of possible instability in these countries have immediate impacts on the price we pay for oil despite us having no connection to these events. This ‘continuum’ is even stronger regionally because of limited suppliers, shared infrastructure and shared shipping services. The decision of one country in this chain can and will have either positive or negative effects felt by everyone else. A key outcome of this meeting is to achieve a greater understanding of this regional continuum.
5. The Pacific’s ‘smallness’ has resulted in fewer suppliers engaging with the region. The energy sector remains crucial for longer-term prosperity and economic development. For fear of laboring the point, securing our energy supplies at reasonable costs and improving the way ‘we do business’ in this sector is an interest we all share as are the challenges of isolation and the lack of ‘economies of scale.’
6. Many of our governments will have to adjust policies in response to continuing price shocks. The Memorandum of Agreement (MoA) that will be central to discussions over the next two days, its approach, and the principles of cooperation it espouses will enable us to achieve cohesion as a region for the effective operation of a market without loosing our ability to respond to changes or emerging demands and opportunities.
7. You will approach this initiative with your own needs and priorities in mind. We would expect nothing less. Some will approach this from an energy security perspective, some in response to multinational divestment of assets and operations from their economies, and others purely on the price benefits that will eventuate. While we are united in the challenges that we face, we cannot forget the importance of you all developing ‘national’ positions on the issues that will be considered over the next two days.
8. The common thread that binds us here today is our complete dependence on petroleum products to drive our economies. Pooling our resources and expertise, and coordinating our demand requirements can only serve to improve the competitiveness and efficiencies in this market. Our Leaders’ are confident of this and seek your inputs on a finalized package of measures.
9. This initiative will achieve both soft and hard deliverables. The hard deliverables will manifest themselves in a number of ways, and depending on your individual national policies could be in the form of lower product prices, more stability in those prices, or greater private sector participation. The softer deliverables, unseen, but just as important, include greater energy security, stronger coordination, improved regional cohesion and ultimately less pressure on the public purse.
10. I have been asked many times, how feasible is this initiative? It is really not as difficult as one thinks. The most challenging part of this entire process has been the design of a collaborative mechanism that will enable you all to jointly agree on a way to move forward together regionally. The Memorandum of Agreement (MoA) establishes this partnership and charts that way forward.
11. It is your role as the experts group to consider the framework for this partnership, the principles that will guide government-to-government collaboration, and the process by which decisions will be made on the appropriate measures to ensure greater energy security for this region.
12. Forum Leaders have stressed the importance of this work being undertaken as a priority and Pacific Energy Ministers have endorsed this approach.
13. This initiative is not only a key Pacific Plan initiative but one discussed at length by Forum Leaders at this year’s meeting in Niue. There is an expectation that we here today will be able to lead these efforts by considering the MOA and what it proposes. Your recommendations on the proposed approach will be considered by Forum Economic Ministers in Port Vila next month, the region’s energy ministers and finally Forum Leaders in 2009.
14. I wish you well in your meeting. Thank you.

(The statement was read on behalf of Mr Feleti as he was unable to make it to the meeting)