Energy importers should work out their differences in face of rising oil prices

Energy importers must set aside dreams of energy independence to work out their differences in the face of rising oil prices.

	energy import(yaleglobal.yale.edu)
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Attempts by consumer countries to break free of their dependence on foreign oil only increases friction on international markets, as do nationalizations and arbitrary contract changes by producing nations, said Rex Tillerson, chairman and chief executive of Exxon Mobil Corp.

While Tillerson did not cite any specific examples among producing countries, Venezuela recently nationalized its oil production, which left foreign producers like Exxon and Italy's Eni SpA out in the cold.

"Some exporting and importing countries are losing sight of their interdependence," he said at an energy conference in Rome. "They are responding to the energy challenge by pursuing policies of resource nationalism."

In the United States, the gap between domestic consumption and production stands at 30 percent of the country's daily demand for energy, Tillerson said in his address to the forum.

While greater energy efficiency and access to domestic supplies could reduce the gap, nothing can "eliminate Americans' need for imports" and the pursuit of energy independence only adds uncertainty among international trading partners, he said.

Tillerson's comments were echoed by other speakers at the industry forum running through Thursday.

"Unless we change our motoring habits, energy independence in the United States is not attainable," said Michael Morris, CEO of American Electric Power Co.

Governments in energy-rich countries must also be dependable, refraining from further nationalizations and from making unilateral changes to their existing contracts, Tillerson said.

"International oil companies need to be confident that contract terms will be honored or they'll be less likely to do technological upgrades and investments" of oil and gas projects, he said.

Exxon Mobil, the world's largest publicly traded oil company, walked away from its heavy oil upgrading operations in Venezuela's Orinoco Basin earlier this year after President Hugo Chavez's government changed the terms of the contracts.

The company filed a US$750 million arbitration claim with the International Centre for Settlement of Investment Disputes in September over its stake in the Cerro Negro crude upgrading facility.

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