PETROLEUM: Caught between War and Environmental Pressures

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Sep 6 2002 (IPS) - The looming threat of war in Iraq and the less perilous pressures from the environmental movement did not stand in the way of optimism Thursday, the final day of the 17th World Petroleum Congress, in Brazil.

Demand for petroleum will grow an average of 1.9 percent annually until 2020, when this fuel will still make up 40 percent of the global energy matrix, said, Jean-Paul Vettier, chief of oil refining and marketing for the French consortium TotalFinalElf, citing projections made by the International Energy Agency (IEA).

World consumption would thus rise from the current 76 million 159-litre barrels of petroleum daily to nearly 120 million in 2020, calculates Alí Rodríguez, president of Petróleos de Venezuela SA (PDVSA), one of the largest companies in Latin America.

These forecasts have been strengthened by the World Summit on Sustainable Development, which ended Wednesday in the South African city of Johannesburg.

After 10 days of negotiations, few concrete initiatives were agreed by the 190 countries in attendance.

At the Johannesburg Summit, failure was the fate of Brazil’s proposal to set a target of 10 percent renewable sources for all energy consumed worldwide by 2010.

The rejection of the Brazilian initiative marked a clear victory for the petroleum industry and for oil-producing countries, which actively opposed the measure, alongside the United States.

This outcome suggests that changes in energy production to “cleaner” renewable sources will be slower than what the environmentalists had hoped for.

Activists and some Latin American and European governments left Johannesburg frustrated that no concrete targets were set that would help curb the greenhouse effect caused by the accumulation in the atmosphere of carbon dioxide and other gases emitted when fossil fuels are burned.

Nevertheless, the demand for petroleum is increasing at a slower pace than in the previous period, from the oil crisis of 1973 to 2000, when annual growth reached 2.2 percent, according to the IEA.

Meanwhile, renewable energy sources — wind, solar, ocean waves — should see a more accelerated increase, of four percent annually, followed by natural gas, with 2.7 percent.

The problem, say environmentalists, is that even with rapid expansion of clean energy production, it does little to combat climate change because they represent just 2.2 percent of the world’s energy consumption today.

The question weighing heavily on the 17th World Petroleum Congress, which took place in Rio de Janeiro Sunday through Thursday, was the possibility of a U.S.-led attack against Iraq.

International oil prices have been fluctuating a great deal in recent days, depending on whether the news indicates imminent military moves against the oil-producing Arab nation.

On Wednesday, for example, a hardline speech by U.S. President George W. Bush caused a two-percent price increase, with the benchmark North Sea Brent crude reaching 27.10 dollars per barrel in London.

Rilwanu Luckman, the Nigerian-born president of OPEC (Organisation of Petroleum Exporting Countries), said, however, that a conflict in Iraq would not cause an explosion of oil prices. Iraq’s crude exports would quickly be replaced, he assured.

The OPEC members — Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela — maintain a daily output of 21.7 million barrels of crude.

The 11-member cartel could expand its output by seven million barrels daily, with a million from his country alone, said Luckman.

The president of Saudi Aramco, Abdallah Jum’ah, meanwhile promised that his company could step up production from seven to 10 million barrels a day.

Venezuela would add 1.5 million barrels to its current daily output of 2.5 million, said Rafael Ramírez, energy minister for the only Latin American member of OPEC.

The intention expressed by these industry leaders is to prevent a dramatic price hike and not take advantage of the potential U.S.- Iraq conflict to boost profits or use petroleum as a political weapon.

The ideal price is an average of 25 dollars a barrel, says the president of OPEC, whose members hold three-quarters of the world’s known petroleum reserves and 40 percent of all production.

Meanwhile, environmental and social problems have become a new concern of the petroleum industry. A seminar on social responsibility that took place parallel to the World Petroleum Congress drew oil executives, environmentalists and other experts.

The oil companies are doomed and must “face their death with dignity”, stated Brazilian singer-songwriter Gilberto Gil, speaking as head of the Fundaçao Onda Azul (Blue Wave), a non- governmental organisation active in defending the environment.

Petroleum “is not a clean energy source, nor is it sustainable, and the next World Petroleum Congress must focus its debate on renewable sources and the transition to a new energy panorama, stated Benedict Southworth, coordinator of the climate campaign for Greenpeace International.

“The transition has already begun,” responded Irani Varella, director of services at the Brazilian state-run oil giant, Petrobrás, pointing out that his company is not longer dedicated exclusively to crude, but has become an energy enterprise, with investments in renewable sources like wind and biomass.

Petrobrás is willing to work with environmental groups in the search for solutions to the contamination caused by fossil fuels, but, said Varella, doing so “requires mutual respect.”