The IEA was initially dedicated to responding to physical disruptions in the supply of oil, as well as serving as an information source on oil markets. Today it is branded as the OECD energy watchdog. And though debatable, yet, some believe that Washington attempts to pursue and advance its energy related objectives through this forum. In fact, while the IEA released its much-awaited World Energy Outlook - 09, arguing that the world has the capacity to meet the emerging fossil fuel requirements, not everyone seemed to agree. Skeptics pointed to currents originating from Washington impacting the report.
Over the years the IEA mandate has evolved to the "3Es" - Energy security, Economic development and Environmental protection. The latter indeed focuses on mitigating climatic change. As the political dimensions of energy security has over the years receded somewhat into the background, the IEA has assumed a role in promoting alternative energy sources (including renewable), rational energy policies and multinational energy technology cooperation.
However, despite this changing and evolving mandate, the IEA is primarily viewed as the voice of the Western consumers. When established, it was regarded as the Western answer to OPEC. Its genesis in the immediate aftermath of the 1973 crisis, and its evolution indicated to many its raison d'être - to diversify away the western reliance from Arab oil. The objective was clear; the Western, industrialized world should not remain hostage at the hands of the Arab oil producers - as simple as that. It was basically the consumers' club - bringing together, major Western producers. The IEA counts as its members 28 countries of the OECD and for much of the group's near 40-year existence these countries were also the world's largest oil consumers. Things have but changed. Although still not off the Arab crude hook - the Western, industrialized world is no more the brightest spot on the global energy map. Consumption in OECD is at best at a standstill. Environmental policies and economic malaise has reduced the OECD demand. Instead, Asia - and basically China - is currently the global focus, as far as crude consumption is concerned. Saudi exports to China have now crossed the one million barrels per day mark, while on the other hand, the US - the erstwhile top destination for Saudi crude - is currently receiving at least 20 percent less than that from the Kingdom.
And this brings to fore the issue of the relevance of the IEA to the global energy equation. Today the IEA does not represent all the major consuming nations - and that compromises its position and indeed relevance.
And the fact is now being conceded at the top. As energy demand shifts eastward, the institution risked losing relevance, Nobuo Tanaka, the IEA executive director conceded while talking on the sidelines of the 12th International Energy Forum ministerial in Cancun, Mexico. "Our relevance is under question because half of the energy consumption already is in non-Organization of Economic Cooperation and Development countries." Last month, China's oil demand grew at 28 percent, a level the IEA described as "astonishing." Indeed, the agency's assigned task of stabilizing the markets in hours of need had become far more difficult since so much of the world's demand and its stored oil now resided in countries outside the IEA's domain, particularly in China, Tanaka conceded. "For the sake of transparency, we need their help," Tanaka told the Financial Times. He noted the IEA's storage level reports - a key indicator of whether the market is over- or under-supplied - were losing their significance because they failed to include some of the world's biggest hoards of oil. In order to win back the clout, IEA has urged Beijing to join the consumers' club. "In many ways they (the Chinese) are already working closely with us. But eventually we wish they would join us," Tanaka added. Diplomats of the IEA's member countries in recent months have been courting Chinese officials and are considering rewriting the organization's constitution if required. As its energy imports continue to surge, China may also find it useful to join, if only to secure a new platform to advance its agenda. China's state-owned energy giants are subtly teaming up with Western energy companies to strike deals in regions and sectors where a Chinese-only bid could be politically sensitive. Mid-ranking Chinese officials have been allowed to attend IEA committee meetings on issues such as the energy security dialogue and energy technologies. They had also attended meetings on more sensitive subjects, such as emergency response and long-term policy planning. China's Ministry of Science and Technology is translating much of the IEA's work into Chinese and the IEA itself has a Chinese version of its website.
Beijing yet has been wary of joining multilateral organizations it sees as being controlled by rich developed countries, particularly the US. On the international stage, its leaders prefer to portray China as the champion and chief advocate for poorer countries and point out it is itself a developing country and not yet a global superpower, in spite of its rapidly growing wealth and influence.
China is striving to forge still closer political, commercial and strategic ties with the oil rich Gulf and would never like to put that in jeopardy. Beijing wants to retain its third world connection and remains keen to protect and safeguard the image of not being a part of the Western agenda. It would definitely weigh its options, rather closely, before embracing the IEA, analysts strongly believe. For that could take it into a different camp. From a China perspective, the IEA is still a different ballgame.
Beijing definitely seems inclined to work closely with international organizations, yet despite the invitation to join, it would take time. Joining the IEA may not be anywhere round the corner as yet.
