Thursday, 1 March 2012

International Energy Agency (IEA)

The International Energy Agency (IEA) is an autonomous organisation which works to ensure reliable, affordable and clean energy for its 28 member countries (mostly developed states of the North) and beyond.

Founded in response to the 1973/4 oil crisis, the IEA’s initial role was to help countries co-ordinate a collective response to major disruptions in oil supply through the release of emergency oil stocks to the markets (for eg:
IEA makes 60 million barrels of oil available to market to offset Libyan disruption (23 June 2011)). Each IEA member is required to hold oil stocks equivalent to at least 90 days of net imports and to maintain emergency measures for responding collectively to sudden disruptions in oil supply.
Additionally the IEA recognizes the broader needs of ensuring energy security and is progressively taking a more comprehensive approach to the security of supplies, including for example natural gas supplies and power generation. And, it is at the heart of global dialogue on energy, providing authoritative and unbiased research, statistics, analysis and recommendations.

Today, the IEA’s four main areas of focus are:
  • Energy security: Promoting diversity, efficiency and flexibility within all energy sectors
  • Economic development: Ensuring the stable supply of energy to IEA member countries and promoting free markets to foster economic growth and eliminate energy poverty
  • Environmental awareness: Enhancing international knowledge of options for tackling climate change
  • Engagement worldwide: Working closely with non-member countries, especially major producers and consumers, to find solutions to shared energy and environmental concerns
Cooperation between the IEA and India started in 1998, and has intensified and broadened significantly since India’s participation, jointly with China and Russia, in the IEA 2009 Ministerial. A ‘Proposed Schedule of Joint Action for the years 2011-2012’ was also drawn up.2



  1. how is OPEC different from IEA?

    is there any coordination between the two?

  2. OPEC (Organization of Petroleum Exporting Countries)is an inter-governmental organization of 12 oil-exporting countries. Formed in 1965 its main task is to control oil production and prices. The stated aim is to :

    (a) give due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries;
    (b) maintain an efficient and regular supply of petroleum to consuming nations, and
    (c) facilitate a fair return on capital to those investing in the petroleum industry

    In 1973 the OPEC implemented an oil embargo, i.e. they stopped oil shipments to the US (embargo was variously extended to Western Europe and Japan) , they raised the posted price of oil by 70% and also implemented a reduction of 5% in oil production monthly till their political objectives were met.
    This oil embargo was a response to the US supply of arms to Israel in the Yom Kippur war (Egypt and Syria vs. Israel).

    The IEA was formed in response to this oil crisis of 1973-74. Over the long term, the oil embargo changed the nature of policy in the West towards increased exploration, energy conservation.

    It must be noted that OPECs ability to control oil has somewhat diminished from then due to the discovery and development of large oil reserves in Alaska, the North Sea, Canada, the Gulf of Mexico, the opening up of Russia, and market modernization. As of November 2010, OPEC members collectively hold 79% of world crude oil reserves and 44% of the world’s crude oil production, affording them considerable control over the global market.The next largest group of producers, members of the OECD and the Post-Soviet states produced only 23.8% and 14.8%, respectively, of the world's total oil production.

    Note: An embargo is the partial or complete prohibition of commerce and trade with a particular country, in order to isolate it.


  3. Reg cooperataion between the two:

    OPEC and IEA were, in essence, set up according to contrasting agendas. OPEC was established in 1960 to reflect the concerns of oil-producing developing countries, while the IEA was formed 14 years later to represent the interests of oil-consuming advanced economies.

    Recently efforts have been made to increase cooperation between the two. This is because there was an increasing similarity in goals, “with both organisations striving to enhance the predictability, reliability and stability of the oil market.”

    However if news reports are to be believed then they they seem to be on different/opposing sides of issues mostly.