RIYADH, Dec 3: As a galaxy of global energy leaders got together here when the International Energy Forum Secretariat (IEFS) was formally inaugurated in the diplomatic enclave of Riyadh in November, the issue of “oil prices and energy security”, and which now “are at the top of international agenda”, remained the focus of discussion and deliberation -– indeed behind closed doors.

And so when Ambassador Arne Walther, Secretary General of the IEFS, says it is one of the most important issues facing the world today, he is not at all off the mark. Such important is the issue now that the G-7 summit earlier this year not only discussed the impact of the rising energy costs on the industrialized economies of the world but also appreciated, in its official communiqué, the significant role of the Riyadh-based IEFS in handling this issue.

After the Riyadh meeting, Mr Walther told this correspondent that the basic facts were now getting clearer. “Both the sides are approaching consensus on the state of affair (existing in the energy industry) and how the issue has to be dealt with,” he insisted. Definitely a win-win scenario is being targeted. The IEF has a major task in hand indeed.

And as the parties were nudged towards some sort of “dialogue rather than confrontation”, both the sides -– consumers and producers -– positions are being defined and redefined. New battle lines are being drawn. A battle of wits definitely seems to be on card in many respects. It is definitely absorbing to witness this posturing of the parties from sidelines.

Over the last one year or so, as the crude prices started to surge for a number of reasons, the pressure on oil producers -– mainly from Opec -– to invest heavily in facilities and open their taps has been growing, almost incessantly.

British Chancellor Gordon Brown, a robust advocate of more action from Opec to prevent the global crude markets from touching new heights, in his presentation during the IEF meeting stressed on five issues -– increased supply from Opec, greater transparency over production and reserve volumes, an increase in infrastructure investment, improved energy efficiency and helping poorer countries cope with rising oil budgets.

In response to this growing pressure, and as the debate on the issue raged, oil producers also finally laid bare their cards. None else than the king of Saudi Arabia himself in his presentation before the IEF raised the issue of taxes on oil in importing countries. Vowing to continue to provide enough supplies, so as to keep the global economy well oiled, the Saudi king urged the consuming countries to look at their taxation policies too. “These (consuming) states should alleviate the ordeal of their citizens by cutting taxes on petroleum products when prices increase,” King Abdullah reiterated. The call was definitely terse and clear.

Opec chief and Kuwaiti Energy Minister Sheikh Ahmad Fahd al-Sabah also made the same point, saying: “We will have many meetings and we will try to seek tax cuts in consumer countries.” In Europe, Sheikh Ahmad reiterated some 80 per cent of the price (the consumers pay) was government taxes.

And while the chorus in the developed world, including the important G7 deepening, for Opec to be more transparent and open its taps further, Saudi Oil Minister Ali al-Naimi almost turned the tables on them by saying that Saudi Arabia was spending $50,000 million to raise its output capacity, but definitely needs a clearer picture of where the extra production was needed. A clear question of greater transparency on part of consumers too.

The producers too need a road map, he stressed.

Seeking the roadmap for demand in consuming nations, he stressed: “As producers we do not want to build the facilities which will not be met by demand.”

In times when rigs and even skilled labour are in short supply pushing up the overall costs to bring on stream new wells, the oil producers can not afford to take a gamble and invest in facilities which not only may not be required, but could ultimately also floor the global crude markets. Oil producers are officially and strategically striving for ‘fair pricing’ and should not be expected to floor crude market prices.