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New chief for the IEA

Aug 16 2011 13:18 Reuters

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Amsterdam - The burden of oil on a broken world economy and damaged ties with Opec will be major challenges for Dutch politician and former teacher Maria van der Hoeven when she takes over as head of the International Energy Agency on September 1.

Van der Hoeven must also reassess membership of the IEA, which represents oil consumer countries, as China and India emerge as the big oil users of the future and as demand in the United States, still the world's biggest gasoline guzzler, levels off.

Those who know Van der Hoeven say her three-and-a-half years as Dutch minister of economy, a post that included responsibility for energy policy, has equipped her well.

"She is well known and she is liked. That's one side of her. And another side is that she can be very focused on what she wants to reach, what she wants to get. By and large, the combination of these two things will make her a strong chief of the IEA," said former political associate Hans Vijlbrief, director general at the Dutch Ministry of Economic Affairs.

Some traders, speaking on condition of anonymity, voiced concern the former teacher of vocational education, who was elected a member of parliament in 1991, did not know enough about energy.

But her backers say her stint as economy minister from February 2007 to October 2010 had a large energy content, including establishing ambitious targets for renewable energy.

At the same time, the Netherlands' status as a gas exporter allowed her to connect with the major Opec members during trips to the Middle East.

Jan Willem van Hoogstraten, Abu Dhabi National Energy Company's managing director for the Netherlands, said Van der Hoeven had attracted foreign partners to play a part in the development of the Dutch gas hub.

"These projects cannot be realised without strong support from the state. Maria van der Hoeven generated the needed trust between the companies and countries involved by explicitly expressing strong support from the Dutch state," Van Hoogstraten said.

Others who spoke highly of her include Claude Mandil, former head of the IEA from 2003-2007 who has been described as its best executive director yet.

"She is very, very clear-thinking and this is a great opportunity for her," said Mandil.

Tricky legacy

Mandil was succeeded by Nobuo Tanaka, whose four-year stint ending on August  31 leaves Van der Hoeven with a difficult legacy after he oversaw an emergency reserves release in June.

Officially, the release was to fill the supply gap left by the loss of Libyan output of more than 1 million barrels per day to civil war, but the agency also cited concerns about the world economy.

Given that the cut-off of Libyan supply began months before the reserves release, the IEA's timing laid it open to the charge it was using stockpiles to try to influence the oil price and had drifted from a long-held policy of keeping them for emergency supply disruption.

The price of Brent crude is still close to $110, compared with just above $114 on the eve of the reserves release announcement.

"I think the biggest issue is how long it took them to respond to Libya. Emergency reserves were set up for this reason, and if they keep trying to keep their powder dry, it makes little sense to hold reserves," said one former IEA analyst, who spoke on condition of anonymity.

The release also followed a meeting of the Organization of the Petroleum Exporting Countries that collapsed in disarray after members failed to agree on a Saudi proposal to increase output to try to calm prices.

OPEC Secretary General Abdullah al-Badri was swift to criticise the IEA's response at the time. "Strategic reserves should be kept for their purpose and not used as a weapon against OPEC," Badri told Reuters.

Subsequently, he softened his tone, but analysts said relations with Opec were likely to remain tense, not least because divisions within the producer group have also soured.

Observers who know Van der Hoeven, the IEA's first female head, have faith in her powers to win round all parties and renew the cooperation that had existed between the IEA and Opec for around two decades.

"She has a relationship with these guys," a former senior executive at the IEA said. "She knows them well and favourably from being a Dutch energy minister."

The former IEA analyst also cited the need for the agency to draw China and India into its policies, including on reserves releases. Protracted talks on making China and India members of the IEA have yet to reach fruition.

Analysts are keen for China in particular to join the existing 28 members of the IEA in delivering credible oil data, which would fill in a huge gap in market knowledge, remove one of the uncertainties associated with forecasting supply and demand and could help to limit speculation.

The IEA has also invited Russia to join its ranks.

The major resource-holder, currently pumping more oil than Opec's biggest member Saudi Arabia and also the world's biggest gas producer, has never joined the producers' club and may well shun membership of the consumers' agency as well.

Warmer ties, however, could be possible, judging by a portrait of Van der Hoeven in English-language Russian newspaper the Moscow Times that played up her experience in dealing with Russian government officials and Gazprom executives.

opec  |  iea  |  energy  |  oil
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