[Title] Speech by Minister for Foreign Affairs Yoriko Kawaguchi, At the Dinner held on the occasion of the 121st Meeting of OPEC Ministerial Conference

His Excellency Dr. Rilwanu Lukman,

His Excellency Dr. Alvaro Silva-Calderon,

Distinguished guests,

I would like to extend my heartfelt welcome to the representatives of the major oil producing countries around the world, who have assembled here on the occasion of the 121st Meeting of OPEC Ministerial Conference held in Japan for the first time in its history. It is my greatest pleasure and honour to be able to host this dinner on behalf of the Government of Japan on this evening. I have just flown in directly from Washington DC to Osaka so that I could spend some time with you this evening. If, during my address, I make any inappropriate remarks, please take it that I am still suffering from jet lag.

When I told some of my friends in US about this dinner, they all asked me the same question. Why OPEC Conference in Japan? I asked myself the same question at first, but as I thought more about it, I came to realize why. Japan and OPEC countries are faced with common challenges of how to achieve sustainable development using limited energy resources, and we need to have closer contact and enhance dialogue in order to effectively address these challenges.

(Common Challenges facing Japan and OPEC)

What are these challenges then? The challenges that we are faced with in the field of energy are twofold. On the supply side, stable supply of energy is to our common interest, for which we need to achieve regional stability through efforts toward resolution of regional conflicts and consolidation of peace. On the demand side, our common interest lies in the promotion of diversification of energy sources, energy conservation and environment-friendly use of energy. Let me elaborate on this.

Japan depends almost all of its energy resources on import from abroad. For example, oil accounts for 52% of primary energy consumption in Japan, and more than 80% of that oil comes from the Middle East. It is therefore essential for us to meet the aforementioned challenges if we wish to see Japanese economy continue to develop.

OPEC countries, on the other hand, also need foreign revenue from stable export of oil in order to develop their economy. It therefore follows that regional stability, which is a prerequisite for stable development, production and transportation of energy resources, is also to the benefit of OPEC countries. Environment is also becoming an increasingly important issue for producers of fossil fuels.

Thus we could say that Japan and OPEC are faced with common challenges.

(Japan's efforts in addressing these challenges and Potential cooperation with OPEC)

Now I would first like to briefly explain the efforts that Japan has been making in addressing these challenges and then to refer to the possibility of strengthening cooperation with OPEC countries.

(Efforts to achieve regional stability)

Fight against terrorism constitutes an important pillar of Japan's efforts to achieve regional stability. After September 11, Japan immediately passed a law, enabling our Self- Defense Force vessels and aircraft to be dispatched. Based on this new law, Self- Defense Force vessels and aircraft are implementing support to US and UK in their fight against terrorism in Afghanistan.

I also attach importance to cooperation in the field of consolidation of peace, as exemplified in the holding of the International Conference on Reconstruction Assistance to Afganistan in Tokyo in January. Afghanistan should not be allowed to become a 'failed state' or a 'terrorists' haven' ever again. Japan has implemented assistance in the field of health and sanitation, assistance to refugees and security cooperation. Japan is also trying hard to revitalize communities where refugees and demobilized soldiers can be reintegrated.

In the Middle East, our recent focus has been to support reform of the Palestinian Authority, which we see as vital for the long-term consolidation of peace and conflict prevention. Japan will continue to play a central role in assisting the Middle East Peace Process.

Iraq is currently our biggest concern. Japan' s position is that Iraq should implement all the relevant UN Security Council resolutions, including the immediate, unconditional and unrestricted resumption of UN inspection, and the disposal of weapons of mass destruction. I made this point clear to the Iraqi Foreign Minister when I met him in New York. We acknowledge the recent news of Iraq's move to resume UN inspection as the first step toward realizing the inspections and the disposal of weapons of mass destruction in Iraq. We intend to watch carefully the further development and continue diplomatic efforts.

I assume Iraq was one of the big hidden agenda at today's OPEC Conference, as growing tension in the region will inevitably have great impact on the world economy and the economic situation of the countries of the region.

I believe it would be meaningful for both Japan and OPEC, which have sustainable development as their common challenge, to have an occasion to exchange views from a strategic point of view on such agenda as interrelation between regional situation and oil market.

In this regard, I was just told that OPEC decided to maintain its current production ceiling for now in today's meeting, as a result of the analysis of the current situation and prospect of the oil market. There is a concern that the oil market could be tight in the 4th quarter of this year when the demand for oil products is expected to be high. I hope OPEC will continue to monitor closely the oil market and take speedy and appropriate actions for the stabilization of the oil market when necessary.

(Addressing Environmental Issues)

I would now like to turn to another point which I wanted to raise today--environmental issues. Before taking office as the foreign minister, I was the minister in charge of environmental affairs.

Development of an environment-friendly energy consumption pattern is the key to achieving sustainable development, and it was also taken up in the discussions at the Johannesburg Summit.

One of the important roles that Japan plays in this field is technical cooperation to developing countries whose energy consumption is expected to increase. Japan has experienced serious pollution in the high growth period of 1960s. We have, through this experience, accumulated the knowhow and technology for addressing environmental issues. We will work to help improve the energy efficiency in developing countries and realize an energy consumption pattern which is in harmony with environmental conservation on a worldwide level. I am sure this will also be to the benefit of OPEC countries.

I believe there is much room for OPEC countries and Japan to strengthen cooperation in this field. We could, for example, consider discussing the possibility of Japan transferring technology to OPEC countries or Japan and OPEC countries jointly assisting other developing countries.

(Proposal of the Japan-OPEC Strategic Dialogue)

I have noticed that OPEC, which was initially established as a cartel of oil producers, has recently become increasingly conscious of the significant role it plays in the stability of the international oil market and the global economy. It is such a change in the role of OPEC which has enabled the Producers-Consumers Dialogue to develop steadily. I am happy to see that the 8th International Energy Forum will also be held in Osaka from the day after tomorrow. I am convinced that it will be a good opportunity to add further impetus to the Producers-Consumers Dialogue.

I would also like to build on the discussion during this dinner and to maintain high-level contact between Japan and OPEC. We should have strategic dialogue which covers not only energy issues but also our common concern, such as regional security situation and economic structural reform. Let me propose to establish a high-level forum between OPEC and Japan which will meet regularly, for example on the margin of OPEC meetings. As for the details of this forum, we would like to decide them through close consultation with OPEC at a later date. I hope that this forum will help to build a more comprehensive and strategic relationship between OPEC and Japan.

(Concluding Remarks)

In Japan, we often refer to lubricating oil, when talking of making human relations close and smooth. Oil has definitely played an important role in making Japan-OPEC relations closer and smoother. I hope today's dinner will play an even more important role.

Thank you for your kind attention.