United States Government Accountability Office

GAO Report to the Chairman, Committee on 

International Relations, House of 

Representatives 

INTERNATIONAL 

ENERGY 

International Forums 

Contribute to Energy 

Cooperation within 

Constraints 

December 2006 

 

GAO-07-170 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

December 2006

INTERNATIONAL ENERGY 

International Forums Contribute to 

Highlights of GAO-07-170, a report to the Energy Cooperation within Constraints 

Chairman, Committee on International 

Relations, House of Representatives 

The United States pursues energy cooperation through several international 

energy forums designed to meet specific cooperative needs. They include a 

formal institution with binding petroleum reserve obligations, regional 

associations, and informal gatherings designed to facilitate information 

exchange. Major forums include the International Energy Agency (IEA), the

Asia Pacific Economic Cooperation Energy Working Group, the North 

American Energy Working Group, and the International Energy Forum. 

GAO identified three energy market issues that are important for U.S. efforts 

in international energy cooperation. First, a tighter energy market with 

higher, more volatile, prices has developed. This is due to (1) an 

unanticipated rise in energy demand and (2) constrained supply due to less 

spare crude oil production capacity and increased political frictions in 

certain supplier countries. Second, market participation of national oil and 

gas companies, which are majority owned by governments, has led to 

limitations on access to resources. Third, more reliable energy market 

information is needed to facilitate market stability and plan investment. 

The U.S. government has addressed these issues through its participation in 

international energy cooperation forums; however, the nature of the forums 

can limit their impact. Forums have restricted membership, consensus-based 

agendas and decisions, and voluntary participation. They generally focus on 

noncontroversial issues such as energy efficiency and technology. Within 

these constraints, the United States has tried to mitigate effects of tight 

markets by supporting emergency preparedness. It has not directly 

addressed the impact of national oil companies, but it has pursued related 

areas. It has sought to improve energy information, but Energy Information 

Administration (EIA) statistical expertise has not been consistently 

leveraged for purposes beyond data exchange, and U.S. data submissions to 

the IEA have not been timely. 

Top World Oil Net Importers, 2004 

Net oil imports (million barrels per day)

0

2

4

6

8

10

12

South France Italy Spain India

Korea

United Japan China Germany

States

Source: GAO analysis of EIA data.

Note: This includes all countries that imported more than 1 million barrels per day net in 2004. 

Rising oil prices, resulting from 

growth in energy consumption by

rapidly developing Asian nations 

and by most industrialized nations,

have increased concern about 

competition over oil and natural 

gas resources. In particular, 

Congress expressed interest in how

the United States participates in

energy cooperation through 

international forums. GAO was 

asked to review: (1) what are the 

key international energy forums in 

which the United States pursues 

energy cooperation, (2) what are 

some of the key emerging energy

market issues that are important 

for international energy

cooperation, and (3) how is the 

United States addressing these

issues through its participation in 

these forums. GAO’s work is based 

on contacts with agency officials 

and energy experts and review of

documents. 

What GAO Recommends

GAO recommends that the 

Secretary of Energy emphasize 

improving international energy

information efforts, particularly by 

examining how EIA statistical 

expertise can contribute to data 

efforts and U.S. data submissions 

to IEA can be made more timely. 

DOE expressed concerns and 

provided alternative language

related to EIA’s role and efforts. 

www.gao.gov/cgi-bin/getrpt?GAO-07-170.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Loren Yager at 

(202) 512-4347 or yagerl@gao.gov. 
Contents 

Letter 1

Results in Brief 2

Background 4

The United States Pursues Energy Cooperation through 

International Energy Forums Designed to Meet Specific 

Cooperative Needs 8 

Emerging Energy Market Issues Include Tight Markets, Growing 

Role of National Oil Companies, and Increased Importance of 

Reliable Market Information 14 

Important Constraints Affect U.S. Ability to Address Key Energy 

Market Issues in Forums 27 

Conclusions 37

Recommendations for Executive Action 39 

Agency Comments and Our Evaluation 39 

Appendix I Objectives, Scope, and Methodology 42 

Appendix II July 2006 G-8 Summit and Bilateral Energy 

Cooperation Forums 44 

Appendix III Role of Natural Gas Is Increasing in Tight Energy 

Market 47 

Appendix IV Comments from the Department of Energy 52 

GAO Comments 64 

Appendix V Comments from the Department of Commerce 66 

Appendix VI Comments from the Department of State 67 

Appendix VII GAO Contact and Staff Acknowledgments 70

Page i GAO-07-170 International Energy Cooperation
Tables 

Table 1: Overview of Major International Energy Cooperation 

Forums 8

Table 2: Top World Oil Consumers, with Level of Demand and 

Percentage Change, 2000-2004, and Share of Total World 

Market in 2004 16 

Figures 

Figure 1: U.S. Crude Oil Production and Demand, 1980-2030 5 

Figure 2: U.S. Natural Gas Production and Demand, 1980-2030 6 

Figure 3: Top World Oil Net Importers, 2004 17 

Figure 4: Top 10 Companies Based on Oil Production and Reserves 

Holdings, 2004 21 

Figure 5: Top 10 Companies Based on Gas Production and 

Reserves Holdings, 2004 22 

Figure 6: Top World Dry Natural Gas Consumers, 2004 48 

Figure 7: Top World Dry Natural Gas Net Importers, 2004 49 

Figure 8: Top World Dry Natural Gas Producers, 2004 50 

Page ii GAO-07-170 International Energy Cooperation
Abbreviations 

APEC Asia Pacific Economic Cooperation 

DOE Department of Energy 

EIA Energy Information Administration 

EUROSTAT European Communities 

G-8 Group of Eight 

GDP gross domestic product 

IEA International Energy Agency 

IEF International Energy Forum 

JODI Joint Oil Data Initiative 

LNG liquefied natural gas 

NAEWG North American Energy Working Group 

OECD Organization of Economic Cooperation and Development 

OLADE Organization Latinamericana de Energia 

OPEC Organization of Petroleum Exporting Countries 

UNSD United Nations Statistics Division 

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. It may be reproduced and distributed in its entirety without further 

permission from GAO. However, because this work may contain copyrighted images or 

other material, permission from the copyright holder may be necessary if you wish to 

reproduce this material separately. 

Page iii GAO-07-170 International Energy Cooperation
United States Government Accountability Office

Washington, DC 20548 

 

December 19, 2006 

The Honorable Henry J. Hyde 

Chairman 

Committee on International Relations 

House of Representatives 

The Honorable Henry J. Hyde 

Chairman 

Committee on International Relations 

House of Representatives 

Dear Mr. Chairman: 

One of the emerging forces affecting the global economy has been the 

rapid growth of Asian economies, increased energy consumption in these 

economies, and the rising oil prices accompanying this growth. Congress 

has raised concerns about the nature of international competition for oil 

and natural gas resources and how the United States can secure the energy 

resources needed to support U.S. economic growth. In particular, 

Congress has expressed interest in how the United States has sought to 

advance one of the key principles of energy security—international 

cooperation through participation in international energy cooperation 

forums. 

One of the emerging forces affecting the global economy has been the 

rapid growth of Asian economies, increased energy consumption in these 

economies, and the rising oil prices accompanying this growth. Congress 

has raised concerns about the nature of international competition for oil 

and natural gas resources and how the United States can secure the energy 

resources needed to support U.S. economic growth. In particular, 

Congress has expressed interest in how the United States has sought to 

advance one of the key principles of energy security—international 

cooperation through participation in international energy cooperation 

forums. 

To determine how the U.S. government participates in international energy

cooperation forums, at your request, we reviewed: (1) what are the key 

international energy forums in which the United States pursues energy 

cooperation, (2) what are some of the key emerging energy market issues 

that are important for international energy cooperation, and (3) how the 

United States is addressing these issues through its participation in these 

forums. 

To determine how the U.S. government participates in international energy

cooperation forums, at your request, we reviewed: (1) what are the key 

international energy forums in which the United States pursues energy 

cooperation, (2) what are some of the key emerging energy market issues 

that are important for international energy cooperation, and (3) how the 

United States is addressing these issues through its participation in these 

forums. 

To answer these questions, we reviewed documents and interviewed 

officials responsible for international energy cooperation at the 

Departments of Energy (DOE), State, and Commerce. Our work at DOE 

also included the Energy Information Administration (EIA), a DOE 

statistical agency that provides independent data, forecasts, and analyses 

to promote sound policy making and efficient markets. We focused on the 

oil and natural gas sectors and on the following key international energy 

cooperation forums: the International Energy Agency (IEA), the Asia 

Pacific Economic Cooperation (APEC) Energy Working Group, the North 

American Energy Working Group (NAEWG), and the International Energy 

Forum (IEF). We neither evaluated these forums and their impacts on 

energy policy and the global energy market nor did we evaluate U.S. 

energy policy goals. Rather, we reviewed the forums’ mission, structure, 

and activities. We conducted fieldwork at IEA and the U.S. Mission to the 

To answer these questions, we reviewed documents and interviewed 

officials responsible for international energy cooperation at the 

Departments of Energy (DOE), State, and Commerce. Our work at DOE 

also included the Energy Information Administration (EIA), a DOE 

statistical agency that provides independent data, forecasts, and analyses 

to promote sound policy making and efficient markets. We focused on the 

oil and natural gas sectors and on the following key international energy 

cooperation forums: the International Energy Agency (IEA), the Asia 

Pacific Economic Cooperation (APEC) Energy Working Group, the North 

American Energy Working Group (NAEWG), and the International Energy 

Forum (IEF). We neither evaluated these forums and their impacts on 

energy policy and the global energy market nor did we evaluate U.S. 

energy policy goals. Rather, we reviewed the forums’ mission, structure, 

and activities. We conducted fieldwork at IEA and the U.S. Mission to the 

Page 1 GAO-07-170 International Ene ational Energy Cooperatio gy Cooperation
Organization of Economic Cooperation and Development (OECD) in Paris, 

France, and interviewed U.S. members of the IEA and APEC Energy 

Working Group business advisory groups, as well as private sector energy 

experts. To determine some of the key emerging energy market issues that 

are important for international energy cooperation, we reviewed 

documents and data and interviewed officials at the DOE and the 

Departments of State and Commerce, as well as reviewing relevant reports 

and studies and discussing them with energy experts. We conducted our 

work from January 2006 to November 2006 in accordance with generally

accepted government auditing standards. (See app. I for details about our 

objectives, scope, and methodology.) 

The United States pursues energy cooperation through international 

energy forums that are designed to meet specific cooperative needs. These 

forums range from formal institutions to regional associations to more 

informal gatherings designed to facilitate a frank exchange of information. 

IEA is the only formal institution with binding obligations for a petroleum 

reserve system. It focuses on responding to supply disruptions through 

emergency planning for the coordinated release of members’ petroleum 

reserves, such as in its response to Hurricane Katrina in 2005, as well as on 

providing oil and natural gas market information. The APEC Energy 

Working Group focuses on the rapidly growing Asia Pacific economies; it 

is a voluntary regional effort that seeks to build consensus on energy 

policy issues through sharing best practices and technology insights. 

NAEWG focuses on developing an open, efficient, and transparent North 

American energy market through greater regulatory cooperation and 

exchanges of energy data, information, and technology. IEF—formerly 

known as the “Producer-Consumer Dialogue— facilitates dialogue 

between oil-producing and -consuming countries in biennial ministerial 

meetings and sponsors the Joint Oil Data Initiative (JODI), a recent effort

to establish a world oil database. 

Results in Brief 

We identified three key energy market issues that are important for U.S. 

efforts in international energy cooperation in the oil and natural gas 

sectors. First, world oil demand has risen more rapidly than expected,

particularly from major developing countries such as China and India. At 

the same time, supply has become more constrained and more susceptible 

to disruptions, due to such constraints as political or energy sector 

frictions in certain producing countries such as Iraq, Nigeria, Venezuela, 

and Iran and less spare crude oil production capacity. This has resulted in 

a tight energy market characterized by higher prices. Second, the market 

participation of national oil and gas companies—which are majority 

Page 2 GAO-07-170 International Energy Cooperation
owned by national governments—from both energy consuming and 

producing countries has led to limitations on access to oil and natural gas 

resources. Concerns have arisen that some national oil and gas companies 

may not be able to efficiently bring energy resources to the market and 

that constrained investment climates in some producing countries 

dominated by national companies may inhibit the investment needed for 

continued production and growth. Third, tightened markets and the need 

for substantial investment in the oil and gas sectors have increased the 

importance of more reliable oil and natural gas market information. For 

example, key industry forecasts failed to anticipate the 2004 surge in 

Chinese and global oil demand due in part to unreliable data.

The U.S. government has addressed these key emerging energy market 

issues through its participation in international energy cooperation 

forums; however, these forums, by their nature, can be constrained in the 

degree to which they can have an impact on these issues. Discussion of 

energy issues among sovereign nations for which energy has great 

domestic economic and political sensitivity generally means that forums 

focus on noncontroversial issues, like energy efficiency and technology. 

Forum efforts are also constrained by inherent limitations in restricted 

membership, consensus-based decision making, and the voluntary nature 

of participation and follow-up. However, within these constraints, the U.S.

has tried to mitigate the imbalances associated with tight markets by 

supporting efforts such as emergency preparedness, policy and technical 

outreach to developing countries with fast increasing energy needs, energy 

technology research and training, and cooperation with producer 

countries. The United States has not directly addressed the impact of the 

growing participation of national oil companies on the energy market at 

the forums, but it has pursued related areas such as investment climates. 

Forum initiatives to improve information have included capacity building, 

data sharing, and data standardization efforts. The United States has 

supported such efforts through its participation in the forums; however, 

EIA’s involvement in initiatives to improve international data has been 

indirect and ad hoc according to a senior EIA official. Despite the 

importance of reliable international energy data for market stability, EIA’s 

expertise has not been consistently leveraged for international energy

cooperation. Furthermore, due to differing reporting schedules, U.S. data 

submissions to the IEA have lacked timeliness and contributed to the 18-

month lag for which published international data is available.

In this report, we make two recommendations to DOE to emphasize the 

priority of improving energy information efforts within the international

forums, particularly by (1) examining how EIA expertise can contribute to

Page 3 GAO-07-170 International Energy Cooperation
international forum data efforts and (2) examining how U.S. data 

submissions to the IEA can be made more timely. We provided a draft of 

this report to DOE and the Departments of Commerce and State. All three 

agencies provided written comments, which are reproduced in appendixes 

IV, V, and VI, respectively. The Department of Commerce agreed with our 

recommendations. The Department of State provided information about 

organizational changes it had made recently that highlight the importance 

of global energy challenges. DOE stated that the U.S. government has been 

actively engaged in international energy forums to advance U.S. energy

security objectives and that our report adds to the greater understanding 

of these efforts. However, DOE expressed concerns with our 

characterization that EIA expertise has not been consistently leveraged to

improve international energy data through the multilateral forums and 

with our description of how U.S. data submissions to IEA have not been 

timely. DOE provided alternative language that we incorporated where 

appropriate. Finally, DOE stated that it was concerned that GAO asserts 

that providing more data on a timely basis will resolve energy market and 

security issues. While GAO makes no such assertion, we emphasize that 

improving energy statistics is one important way in which the 

international forums can enhance the impact of international cooperation, 

especially as regards global energy market transparency. DOE and the 

Departments of Commerce and State also provided technical comments, 

which we have incorporated where appropriate. 

The growth rate of crude oil and natural gas demand in the United States 

has outpaced the growth rate of the country’s crude oil and natural gas 

production over the last 20 years. This widening gap is projected to 

accelerate in the future. As shown in figure 1, EIA forecasts that this trend 

for crude oil will continue through 2030. Natural gas demand, as shown in 

figure 2, has similarly outpaced natural gas production, and EIA forecasts 

that this trend will also continue. This widening gap between U.S. 

domestic energy production and consumption of oil and natural gas has 

focused attention on the importance of these commodities to the U.S. 

economy. 

Background 

Page 4 GAO-07-170 International Energy Cooperation
Figure 1: U.S. Crude Oil Production and Demand, 1980-2030 

Source: GAO analysis of EIA data.

Million barrels per day

0

2

4

6

8

10

12

14

16

18

20

Production

Demand

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

Projections

2006

Note: Production is based on U.S. domestic oil field production data; demand is based on U.S. 

domestic oil field production plus net crude oil imports. 

Page 5 GAO-07-170 International Energy Cooperation
Page 6 GAO-07-170 International Energy Cooperation 

Figure 2: U.S. Natural Gas Production and Demand, 1980-2030 

The United States’ most recent “National Energy Policy” report, issued in 

May 2001, outlines several U.S. energy security objectives that are relevant 

for international energy cooperation.1

 The report states that the United 

States should work cooperatively with key countries and institutions to 

expand sources and types of supply, enhance the transparency and 

efficiency of markets, strengthen U.S. capacity to respond to disruptions, 

promote international trade and investment in the energy sector, and 

 1

For recent GAO evaluations of related energy activities, see GAO, National Energy Policy: 

Inventory of Major Federal Energy Programs and Status of Policy Recommendations, 

GAO-05-379 (Washington, D.C.: June 10, 2005); GAO, Energy Security: Issues Related to 

Potential Reductions in Venezuelan Oil Production, GAO-06-668 (Washington, D.C.: June 

27, 2006); GAO, Natural Gas: Factors Affecting Prices and Potential Impacts on 

Consumers, GAO-06-420T (Washington, D.C.: Feb. 13, 2006); and GAO, Energy Markets: 

Factors Contributing to Higher Gasoline Prices, GAO-06-412T (Washington, D.C.: Feb. 1, 

2006). 

Source: GAO analysis of EIA data.

Trillion cubic feet

0

5

10

15

20

25

30

Production

Demand

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

Year

Projections

2006
enhance emergency preparedness, among other goals.2

 Several 

recommendations outlined in the “National Energy Policy” report provide

guidance for the United States as it engages in multilateral and bilateral 

forums and discussions designed to enhance U.S. energy security, such as

the following: 

• Work with the IEA to ensure that member states fulfill their stock-holding 

commitments and encourage major oil-consuming countries that are not 

IEA members to consider strategic stocks as an option for addressing 

potential supply disruptions;3

• Work with producer and consumer country allies and the IEA to craft a 

more comprehensive and timely world oil data reporting system; 

• Use membership in multilateral organizations, such as APEC, and bilateral

relationships to implement clear, open, and transparent rules and 

procedures governing foreign investment and reduce barriers to trade and 

investment; 

• Engage in a dialogue through NAEWG to develop closer energy integration 

among Canada, Mexico, and the United States; and 

• Assist U.S. companies in their dialogue with Russia on investment and 

trade and improve the overall investment climate. 

 2

The “National Energy Policy” report contained over 100 recommendations that it stated, 

taken together, provide a national energy plan that addresses the energy challenges facing 

the nation. In a 2005 report, GAO-05-379, GAO found it is difficult to fully assess the status 

of progress made in implementing the National Energy Policy recommendations because 

the information reported by DOE has been limited, some recommendations are open-ended 

and lack measurable goals, and the National Energy Policy recommendations do not reflect 

all federal energy-related efforts. 

3

For this recommendation, the “National Energy Policy” report specifically encourages the 

United States to work closely with Asian economies, especially through APEC. 

Page 7 GAO-07-170 International Energy Cooperation
The United States pursues energy cooperation through international 

energy forums that meet specific cooperative purposes. These forums 

range from formal institutions with binding obligations to regional 

associations to more informal gatherings designed to facilitate a frank 

exchange of information. Information related to these forums is 

summarized below in table 1. 

The United States 

Pursues Energy 

Cooperation through 

International Energy 

Forums Designed to 

Meet Specific 

Cooperative Needs 

Table 1: Overview of Major International Energy Cooperation Forums

Forum 

Number of 

members Forum structure Forum objectives

IEA 26 Formal institution made up of OECD 

industrialized democracies, with binding 

obligations for petroleum reserve system, 

and about 150 professional staff 

Collective response to oil supply disruptions

Analysis and publication of energy market 

information

Energy policy outreach to major developing 

countries, as well as energy producing countries 

APEC Energy 

Working Group

21 Regional energy forum based on 

consensus decision making and analysis 

from multiple expert groups 

Promoting development of Asia-Pacific energy 

market through sharing energy information, 

expertise, and best practices 

North American

Energy Working

Group 

3 Trilateral (United States, Canada, and 

Mexico) energy forum based on consensus 

decision making and analysis from multiple 

expert groups 

Optimal integration of North American energy

market by sharing policy, regulatory, and 

technical expertise 

International 

Energy Forum

over 60 High-level international energy forum 

fostering dialogue among both energy 

producing and consuming countries 

Supports JODI 

Informal discussion of energy security issues

Source: GAO.

Page 8 GAO-07-170 International Energy Cooperation
IEA was established in November 1974 by most of the members of OECD, 

the major industrialized democracies that were generally also the largest 

consumers of oil, and today has 26 members.4

 It was a collective response 

to energy security concerns arising from the oil embargo imposed by the 

Organization of the Petroleum Exporting Countries (OPEC) the previous 

year to reduce the vulnerability of IEA members to a major disruption in 

oil supplies. IEA’s primary mission was to respond to any future oil crisis 

through a binding emergency preparedness system that established 

emergency oil reserves equivalent to 90 days of members’ net imports, 

countering any future threat of an oil embargo. In addition, it collects and 

analyzes oil market data in order to increase oil market information and 

transparency; assesses member countries’ domestic energy policies and 

programs; makes projections based on differing scenarios; and prepares 

studies and recommendations on specialized energy topics.

IEA Focuses on 

Emergency Planning for 

Supply Disruptions, Oil 

Market Information, and 

Outreach to Major 

Developing Nations 

IEA’s goals have evolved over the years as the energy market has changed; 

today it focuses its emergency planning less on the threat of embargoes 

and more on supply disruptions that might arise from natural disasters, 

wars, or terrorist acts. More importantly, as the structure of the oil market

has changed over the years, IEA’s emergency response measures have also 

evolved from a government emergency allocation program to marketbased measures, according to a DOE official. IEA’s release of oil reserves

in response to Hurricane Katrina in September 2005 is an example of its 

current focus. In addition to emergency preparedness measures, IEA also 

emphasizes outreach to nonmember countries, reducing dependence on

oil through alternative energy and advanced technology, and integrating 

environmental and energy policies. Recently, IEA has also recognized that

it needs to enhance its expertise related to the growing global natural gas 

market. 

IEA is an autonomous international organization based in Paris, France, 

created within the framework of the OECD in order to implement the 

treaty establishing it.5

 IEA’s main decision-making body is the Governing 

 4

The members of IEA are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, 

Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea, Luxembourg, 

Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, United 

Kingdom, and United States. 

5

IEA was established pursuant to the Agreement on an International Energy Program. All 

IEA members must be OECD members. However, not all OECD members are IEA 

members. OECD nonmembers of IEA are Iceland, Mexico, Poland, and the Slovak 

Republic. 

Page 9 GAO-07-170 International Energy Cooperation
Board, composed of senior energy officials from each member country 

and meeting about four times per year.6

 Day-to-day operations are 

conducted by the IEA Secretariat, headed by an Executive Director and 

comprising a professional staff of about 150 energy experts drawn from 

member countries. IEA also receives the input of the IEA Industry 

Advisory Board, which has private sector representatives from member 

countries and meets three to four times a year. 

The United States is significantly involved in IEA activities, according to

U.S. and IEA officials. The Deputy Executive Director is traditionally an

American. The DOE Assistant Secretary for Policy and International 

Affairs and the Department of State Deputy Assistant Secretary for 

Energy, Sanctions, and Commodities both serve on the Governing Board 

and play an active role. U.S. energy officials participate on almost every 

standing group and committee as either a Chair or Vice-chair. In addition, 

the United States has historically provided about 25 percent of IEA’s 

annual budget, which amounted to $5.5 million in 2006, according to a 

Department of State official. 

APEC Energy Working 

Group Seeks to Build 

Broad Regional Consensus 

on Key Energy Issues 

The APEC Energy Working Group, comprised of 21 Asian Pacific 

economies7

 accounting for 60 percent of world energy demand, is a 

voluntary regional effort that seeks to build consensus on energy policy 

issues, primarily through sharing best practices and technology insights.

This working group includes both net energy consuming countries, such as 

the United States, Japan, and China, and net energy producing countries, 

such as Russia and Indonesia. It was launched in 1990 to develop a 

program for energy cooperation. It seeks to maximize the energy sector’s 

contribution to the region’s economic and social well-being, while 

 6

The Governing Board is supported in policy development by a structure of Standing 

Groups and Committees, also composed of member government energy officials, that each 

separately meet two to five times a year and focus on the oil market, emergency 

preparedness, long-term cooperation, nonmember countries, and energy research and 

technology. 

7

These are: Australia; Brunei Darussalam; Canada; Chile; People’s Republic of China; Hong

Kong, China; Indonesia; Japan; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; 

Republic of the Philippines; Republic of Korea; Russian Federation; Singapore; Chinese 

Taipei; Thailand; United States of America; and Vietnam. Members of APEC are called 

“economies” rather than “nations” in order to avoid the issue of the status of Taiwan, which 

is not recognized by China as a separate nation. The compromise was to refer to all 

members as economies and to refer to Taiwan as “Chinese Taipei,” according to a DOE 

official. 

Page 10 GAO-07-170 International Energy Cooperation
mitigating the environmental effects of energy supply and use. Its 

objectives include strengthening the security and reliability of affordable 

energy to all members, and promoting clean and efficient technologies and 

the efficient use of energy to achieve both economic gains and 

environmental enhancement. 

APEC Energy Ministers’ meetings, generally held every 2 years, provide 

the Energy Working Group with political guidance regarding its activities.

The APEC Energy Working Group has its own Secretariat in Australia, 

which has been financially underwritten and staffed by the Australian 

government. The Energy Working Group, generally comprised of member 

government energy officials, meets twice a year. It receives an update on

the activities of the five expert groups, which focus on clean fossil energy,

efficiency and conservation, energy data and analysis, new and renewable 

energy technologies, and minerals and energy exploration and 

development. It also guides the work of the Asia Pacific Energy Research

Centre, an international organization based in Tokyo that receives the bulk 

of its financial support from the Japanese government. Finally, it is 

advised by the Energy Working Group Business Network, which provides 

private sector perspective on key energy issues affecting the region. 

The APEC Energy Working Group fosters discussion of members’ energy 

policies and planning priorities, sharing basic energy demand and supply 

outlook data, considering regional energy policy implications, and 

responding to wide-reaching energy-related issues. Recent efforts include 

its Energy Security Initiative, which comprises both short-term measures 

designed to respond to temporary energy supply disruptions and longer 

term policy responses designed to address the broader challenges facing 

the region’s energy supply. It has also focused on development of the AsiaPacific natural gas market, particularly for liquefied natural gas (LNG).8

The United States generally sends two delegates from DOE’s Office of 

Policy and International Affairs and an observer from the Department of 

State to the Energy Working Group meetings. DOE staff also participate on

the various expert groups. 

 8

LNG is natural gas, primarily methane, which has been cooled to its liquid state at -260 

degrees Fahrenheit. Liquefying natural gas reduces the volume it occupies by more than 

600 times, making it a practical size for storage and transportation. 

Page 11 GAO-07-170 International Energy Cooperation
NAEWG is a trilateral regional forum—including the United States, 

Canada, and Mexico—focused on developing an open, efficient, and 

transparent North American energy market. The forum pursues this focus 

by emphasizing efforts such as greater regulatory cooperation, 

encouraging energy data and information exchange, collaborating on 

energy science and technology, and examining natural gas trade and 

interconnections. 

NAEWG Focuses on 

Regional Regulatory

Cooperation and Exchange 

of Energy Market Data, 

Information, and 

Technology 

NAEWG was established and initially led by the three Energy Ministers of 

Canada, Mexico, and the United States in its inaugural meeting in June 

2001.

9

 Natural Resources Canada, the Mexican Secretariat of Energy, and 

the U.S. DOE jointly chair NAEWG, with day-to-day U.S. leadership now 

provided at the Assistant Secretary level. DOE’s Assistant Secretary of 

Energy for Policy and International Affairs is the U.S. lead, while both the

Department of Commerce and the Department of State support the effort 

at the Deputy Assistant Secretary level. 

The agenda of work identified at the ministerial level is carried out by nine

expert working groups.10 Members of these expert working groups share 

their policy, regulatory, and technical expertise and energy statistics from 

the three countries. According to DOE officials, the products of this work 

are enhanced regulatory cooperation, such as on project siting issues; 

workshops on various energy issues; and joint public written documents 

produced by the expert working groups. For example, in 2005, NAEWG 

published the “North America Natural Gas Vision,” a report addressing the 

region’s natural gas regulations and policies, production and consumption, 

trade, transportation, and supply and demand projections. Each expert 

working group also consults informally with energy industry 

representatives to enable numerous subject area workshops and to obtain 

private sector input on an issue area. 

 9

The formation of NAEWG was one of 105 recommendations for action in the U.S.

“National Energy Policy” report, released in May 2001. With support from the heads of state 

from each of the three countries regarding cooperation in the energy sector, Natural 

Resources Canada Minister Goodale, Mexican Secretary of Energy Martens, and U.S.

Secretary of Energy Abraham established NAEWG in March 2001. 

10These comprise the electricity, energy efficiency, energy picture, hydrocarbons, natural

gas trade and interconnections, nuclear collaboration, oil sands, regulatory, and science 

and technology working groups.

Page 12 GAO-07-170 International Energy Cooperation
IEF—formerly known as the “Producer-Consumer Dialogue”— is a unique 

forum established to facilitate dialogue on energy security issues between 

producing and consuming countries. IEF provides the largest recurring 

global gathering of Energy Ministers, with over 60 countries participating. 

The IEF Ministerial is held every 2 years, rotating in location, and is a 

venue for Energy Ministers to discuss energy security issues. IEF does not 

serve as a decision-making organization or a forum for negotiating formal 

agreements. However, according to Department of State and DOE 

officials, U.S. participation at the senior staff level has increased since 

2000 in recognition of IEF’s value in allowing for informal, frank, and wide

exchange of information.11

IEF Seeks to Facilitate 

Dialogue and Information 

Exchange between Oil 

Producing and Oil 

Consuming Countries 

IEF activities in addition to the Ministerial dialogue include the JODI and 

the International Energy Business Forum. JODI is a recent initiative to 

establish a world oil database, originally combining the efforts of six 

international organizations including APEC and IEA.12 The International 

Energy Business Forum serves as a venue for Ministers to meet with 

industry representatives prior to the IEF Ministerial and had over 30 

companies participating in 2006. The Ministerial dialogue, JODI, and the 

International Energy Business Forum are now facilitated by the IEF 

Secretariat, which was established in December 2003 and is headquartered 

in Riyadh, Saudi Arabia.

In addition to participation with IEA, APEC Energy Working Group, 

NAEWG, and IEF, the United States also participated in the July 2006 

Group of Eight (G-8) Summit hosted by Russia, which served as an ad hoc 

forum addressing the need for international energy cooperation. The 

United States also pursues international cooperation through bilateral 

energy cooperation efforts. We reviewed U.S. bilateral energy cooperation

efforts with Canada, China, India, Mexico, and Russia. Information related 

to these forums can be found in appendix II. 

 11The “Producer-Consumer Dialogue” was originally designed to be a dialogue and 

informational bridge between OPEC and IEA countries. U.S. representatives originally had 

concerns about this dialogue and possible price collusion resulting from the discussions

that have been allayed in the past several years. 

12The other international organizations include the Statistical Office of the European 

Communities (EUROSTAT), Organization Latinoamericana de Energia (OLADE), OPEC, 

and the United Nations Statistics Division (UNSD). These organizations began an 

assessment of the quality of world oil statistics in April 2001 under an initiative called the 

“Joint Oil Data Exercise.” This exercise was transformed into JODI after the 8th IEF in

2002. 

Page 13 GAO-07-170 International Energy Cooperation
Emerging Energy 

Market Issues Include 

Tight Markets, 

Growing Role of 

National Oil 

Companies, and 

Increased Importance 

of Reliable Market 

Information 

Three key energy market issues that are important for U.S. efforts in 

international energy cooperation in the oil and natural gas sectors are: a 

tight energy market, growing market participation of national oil 

companies, and increased importance of reliable energy market 

information. 

Rising Demand and Supply 

Constraints Have Resulted 

in a Tight Energy Market 

World energy demand has risen in recent years, particularly from major 

developing countries, at the same time supply has become more 

constrained and more susceptible to disruptions—resulting in a tight 

energy market characterized by higher prices. During most of the 1990s, 

real crude oil prices (in 2003 dollars) fluctuated around $20 a barrel. While 

crude oil prices started edging up with the economic recovery and 

production cuts at the end of the 1990s, upward price pressures became 

pronounced during 2003-2004. These market conditions contributed to 

world crude oil prices increasing by more than two-and-a-half times from

about $30 a barrel in early December 2003 to a peak of about $77 a barrel 

around mid-July 2006.13 While prices dropped by around $20 a barrel in the 

3 to 4 months following this peak, 14 several energy experts believe that the 

fundamentals of the tight market still exist and are a cause for continuing 

concern. 

In recent years, rapid growth in energy demand by major developing 

countries, such as China and India, and continued steady growth of 

demand by many industrialized nations has contributed to tighter oil 

markets. The main consumers of oil continue to be the advanced 

Rapid Increase in Oil Demand 

by Developing Countries Has 

Contributed to a Tight Energy 

Market 

 13Prices are based on daily spot prices of West Texas Intermediate crude oil at Cushing, 

Oklahoma, as reported by EIA. The spot price of crude oil never dipped below $30 per

barrel again after December 1, 2003, when it was $29.98 per barrel. It peaked on July 14, 

2006, at $77.03. 

14The spot price for West Texas Intermediate crude oil dropped to a low of $56.27 per 

barrel on November 14, 2006, and as of December 1, 2006, was back up to $63.44. 

Page 14 GAO-07-170 International Energy Cooperation
economies. The United States, OECD Europe,15 and Japan together 

account for about half of annual global oil consumption. However, 

consumption in the major developing countries has generally been 

increasing at a faster pace. China, in particular, has gained prominence 

because its demand has grown so fast. One expert noted that China’s 

demand in 2004 rose by an extraordinary 16 percent compared with 2003 

and served as a “demand shock,” or unexpected surge in demand.16 From 

2000 to 2004,

17 total world demand for oil grew by about 8 percent, 

increasing from nearly 77 million barrels per day to about 82 million 

barrels per day. China’s demand for oil rose by 33 percent over this period, 

followed by India’s growth in demand of 15 percent, while U.S. demand 

increased by about 5 percent, and OECD Europe by about 2 percent. 

The data used to measure both oil demand and supply are subject to 

limitations described later in this report, including lack of timeliness and 

transparency, definitional inconsistencies, and national sensitivities. The 

estimates provided represent the broad trends from the most current 

market information used in forecasting and determining cost. Table 2

shows the top world consumers of oil—countries that consumed more 

than 2 million barrels per day—with their level of demand and the 

percentage change from 2000 to 2004, as well as their share of the world 

oil market in 2004. The United States far exceeds the rest of the world in 

its volume of consumption, accounting for a quarter of world demand, 

with about 21 million barrels per day in 2004. Most of U.S. oil demand 

arises from usage in the transportation sector. China’s demand surpassed 

Japan’s in 2003, and it became the second largest consumer of oil, with 

about 6 million barrels per day, or about 8 percent of world demand.18

India’s demand is also growing quickly. It consumed about 2 million 

barrels per day, the sixth highest level of demand.

 15OECD Europe consists of Austria, Belgium, Czech Republic, Denmark, Finland, France, 

Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway,

Poland, Portugal, Slovakia, Spain, Sweden, Switzerland, Turkey, and the United Kingdom. 

16 Daniel Yergin, Chairman, Cambridge Energy Research Associates, before the 

Government Reform Subcommittee on Energy and Resources and the Subcommittee on

National Security, Emerging Threats, and International Relations, U.S. House of 

Representatives, May 16, 2006. 

172004 is the latest year for which data is available for all countries. The term “demand” is 

used interchangeably with “consumption.” 

18In 2005, oil demand data for the United States and China were 20.7 and 6.9 million barrels 

per day, respectively. Total world demand was 83.8 million barrels per day, and the U.S.

and Chinese share of total world demand remained at 25 and 8 percent, respectively. 

Page 15 GAO-07-170 International Energy Cooperation
Table 2: Top World Oil Consumers, with Level of Demand and Percentage Change, 

2000-2004, and Share of Total World Market in 2004 

Million barrels per day 

Ranking Country 2000 2004

Percentage

change

Percentage of

total world

demand

1 United

States 

19.7 20.7 5% 25%

2 China 4.8 6.4 33 8

3 Japan 5.5 5.3 -3 6

4 Russia 2.6 2.8 7 3

5 Germany 2.8 2.7 -4 3

6 India 2.1 2.5 15 3

7 Canada 2.0 2.3 13 3

8 South

Korea 

2.1 2.2 1 3

9 Brazil 2.2 2.1 -1 3

10 France 2.0 2.0 0.5 2

11 Mexico 2.0 2.0 -3 2

Total world 76.6 82.5 8% 100%

Source: GAO analysis of EIA data. 

Note: All countries that consumed more than 2 million barrels per day in 2004 are included. This is

the most recent year of data available for all countries. 

As demand has risen, so have oil import needs. For instance, while the 

United States produced almost 9 million barrels per day of oil in 2004, 

making it the third largest world producer,19 its production met only 42 

percent of its demand, with net oil imports of about 12 million barrels per 

day meeting the remaining 58 percent of demand. China’s import 

dependence has also grown, and it imported about 45 percent of its oil in

2004. Figure 3 shows the top world net oil importers in 2004, countries 

importing more than 1 million barrels per day net. Of these 9 countries, 6 

were totally or almost totally import dependent for their oil consumption. 

For instance, Japan and South Korea were totally dependent on imports, 

predominantly from the Persian Gulf, while many European countries also 

 19Oil production is defined here as crude oil (including lease condensate), natural gas plant 

liquids, other liquids, and refinery processing gain. Saudi Arabia was the largest producer, 

with about 10 million barrels per day, while Russia was second, with about 9 million barrels 

per day, in 2004, according to EIA data. 

Page 16 GAO-07-170 International Energy Cooperation
imported from Algeria, Libya, and Nigeria. The largest net oil exporter to 

the United States was Canada, followed by Mexico, Saudi Arabia, and 

Venezuela. 

Figure 3: Top World Oil Net Importers, 2004 

Net oil imports (million barrels per day)

Source: GAO analysis of EIA data.

Net oil imports as share of total country consumption (percentage)

0

50

100

150

0

2

4

6

8

10

12

South France Italy Spain India

Korea

United Japan China Germany

States

101%

58%

45%

92%

102%

95% 93% 98%

61%

Notes: This includes all countries that imported more than 1 million barrels per day net in 2004 and is

the most recent year of data available for all countries. 

Countries importing more than 100 percent of consumption are likely adding the extra oil to their 

petroleum stocks or this may be due to anomalies in the data. 

While the world supply of oil and refined products has risen to meet 

increased demand, supply constraints have also increased, eroding certain

market cushions and contributing further to market tightness. Increased 

political or energy sector frictions in countries such as Iran, Iraq, Nigeria, 

and Venezuela and decreased spare crude oil production capacity have 

exerted pressure on crude oil markets. Given the tight market situation, 

Oil Supply Constraints Have 

Increased, Putting Further 

Pressure on an Already Tight 

Market 

Page 17 GAO-07-170 International Energy Cooperation
marked by less spare production capacity and other cushions, any oil 

supply disruption can cause the price of oil to rise dramatically. 

One factor contributing to constrained oil supplies is that the political, or 

energy sector, friction in key oil producing nations led to supply 

disruptions and diminished production capacity, in some cases. 

Participation by international oil companies in the oil sector has been 

affected by political tensions in Iraq, Venezuela, and Nigeria, and 

economic sanctions on Iran and Libya. For example, in April 2006, 

Venezuela seized two oil fields operated by two foreign oil companies 

because the companies did not comply with new rules imposed by the 

Venezuelan government. In Nigeria, recent disruptions due to militant 

actions have shut-in about 650 thousand barrels per day of production. 

A second contributing factor is that world production of oil is 84 to 85 

million barrels of oil per day, and the rate of production increase has not 

kept pace with the rate of increased demand. Furthermore, there is very 

little spare production capacity given existing infrastructure. Spare oil 

production capacity— the ability to produce extra barrels of production in 

the short-term—is a key market cushion for responding to market 

disruptions. Since the mid-1980s, growth in world oil production capacity 

has lagged relative to growth in global oil demand, with the result that 

spare capacity has declined from a high in recent times of 5.6 million 

barrels per day in 2002 to between 1 and 1.3 million barrels per day today. 

Most of this spare capacity is held within Saudi Arabia. While in previous 

oil supply disruptions, the U.S. government has been able to negotiate with 

senior officials in Saudi Arabia and other oil-producing countries to 

increase their supply of crude oil, many oil industry officials, experts, and

U.S. government officials said that today such efforts would be less 

effective given the limited levels of spare oil production capacity in world 

markets. 

Downstream investment in pipelines and tankers has also lagged behind 

the growth in global oil demand in recent years, contributing to potential 

bottlenecks. Additionally, private inventories of oil have been in a longterm declining trend, in part because of a trend toward just-in-time 

inventory, according to energy experts. 

Oil production is capital-intensive and heavily dependent on continuous 

investment to maintain existing wells, drill new wells for crude oil 

production, and develop and maintain the infrastructure supporting the 

production network. Extensive investment in the oil sector will be 

Page 18 GAO-07-170 International Energy Cooperation
required to meet future oil demand and maintain spare capacity, according 

to energy experts. 

Looking ahead, there are additional uncertainties related to future supplies 

of oil. Expected new supplies of crude oil may be in places that are 

difficult to access and could involve high extraction and processing costs, 

as with offshore reserves and unconventional crude oils. There is also an 

ongoing peak oil debate—disagreement among oil market experts as to 

when the world will reach its level of peak production of conventional oil

and then begin to decline. 

For a discussion of the growing role of natural gas in world energy 

markets, see appendix III. 

Growing Market 

Participation of National 

Oil Companies Has Led to 

Concerns

In an energy market characterized by relatively high oil prices and 

increasing energy demand, the growing participation and market influence 

of national oil and gas companies—which are majority owned by national

governments—from both energy consuming and producing countries has 

contributed to limited access to oil and natural gas resources in some 

producing countries. National oil companies from producing countries 

already control about 90 percent of the world’s crude oil reserves,20

according to DOE. In contrast, the ability of the international oil and gas 

companies—the large, privately owned and publicly traded oil and gas 

industry entities—to maintain current production levels by replacing their 

energy assets with new reserves is affected by increasingly limited access 

to energy resources around the world. Additionally, access to capital and 

technical expertise by the national oil and gas companies of consuming 

countries has enabled them to compete with the international oil 

companies in the global energy markets. The impact of this industry shift 

is unclear, but some concerns have arisen over (1) the ability of some 

national oil and gas companies from consuming nations to efficiently bring 

energy resources to the market and (2) the constrained investment 

climates in some producing countries dominated by national oil and gas 

companies that may inhibit the investment necessary to ensure continued

production and growth. 

 20Refers to “conventional” crude oil reserves. According to the EIA, conventional crude oil 

reserves are reserves produced by a well drilled into a geologic formation in which the 

reservoir and fluid characteristics permit the oil to readily flow. 

Page 19 GAO-07-170 International Energy Cooperation
The influence of the national oil and gas companies is perceived to be 

growing, as the ability of international oil and gas companies to replace 

their energy resource holdings becomes increasingly limited. According to

DOE Secretary Samuel W. Bodman, in a speech to the National Petroleum 

Council in June 2006, 90 percent of the world’s untapped conventional oil

reserves are controlled by governments and their national oil and gas 

companies, many of which are in politically unstable regions of the world. 

Figure 4 indicates that 7 of the top 10 companies are national or statesponsored oil and gas companies, ranked on the basis of oil21 production. 

The three international oil companies that are among the top 10 are Exxon 

Mobil, BP, and Royal Dutch Shell. Ranked on the basis of oil reserve 

holdings, 9 of the top 10 companies are national or state-sponsored oil and 

gas companies. These top 10 oil and gas companies accounted for an 

estimated 42 percent of world daily oil production and an estimated 64 

percent of world oil reserves holdings in 2004, based on EIA data for world 

estimates. Figure 5 shows a similarly strong position for the national or 

state-sponsored oil and gas companies, with respect to natural gas 

production and reserves holdings. These top 10 oil and gas companies 

accounted for an estimated 44 percent of world daily natural gas 

production in 2004 and an estimated 62 percent of world natural gas 

reserves holdings, based on EIA data for world estimates. Some agency

officials and energy experts believe that, should some countries with 

national oil and gas companies continue to limit competition and 

investment opportunities in their energy sectors, the ability of 

international oil and gas companies to replace their energy resource 

holdings will become increasingly limited to locations marked by high 

geological, political, and financial risks. 

National Oil Companies’ 

Influence Is Growing Relative 

to International Oil Companies 

 21“Oil” includes crude oil, as well as natural gas liquids and condensates. Natural gas liquids 

are hydrocarbons in natural gas that are separated from the gas as liquids through the

process of absorption, condensation, adsorption, or other methods in gas processing or

cycling plants. Condensates are a natural gas liquid recovered from gas wells from lease 

separators or field facilities.

Page 20 GAO-07-170 International Energy Cooperation
Figure 4: Top 10 Companies Based on Oil Production and Reserves Holdings, 2004 

Source: GAO analysis of data from Petroleum Intelligence Weekly, Dec. 12, 2005.

Percentage

0

10

20

30

40

50

60

70

80

90

100

International oil and gas company

National oil and gas company

Exxon Mobil (U.S.) 8%

Royal Dutch Shell (U.K./Netherlands) 7%

BP (U.K.) 7%

Lukoil (Russia) 2%

Saudi Aramco (Saudi Arabia) 28%

National Iranian Oil Co. (Iran) 12%

Petroleos Mexicanos (Mexico) 11%

Petroleos de Venezuela (Venezuela) 8%

Kuwait Petroleum Co. (Kuwait) 7%

Iraq National Oil Co. (Iraq) 6%

Petro China (China) 6%

Saudi Aramco (Saudi Arabia) 32%

National Iranian Oil Co. (Iran) 16%

Iraq National Oil Co. (Iraq) 14%

Kuwait Petroleum Co. (Kuwait) 11%

Petroleos de Venezuela

(Venezuela) 10%

Abu Dhabi National Oil Co. (U.A.E.) 6%

Libya NOC (Libya) 4%

Nigerian National Petroleum

Co. (Nigeria) 3%

Petroleos de Mexico(Mexico) 2%

22%

78%

98%

2%

Top 10 oil and gas companies based

on oil reserves holdings, 2004

Top 10 oil and gas companies

based on oil production, 2004

Notes: “Oil” includes crude oil, natural gas liquids, and condensates. Natural gas liquids are 

hydrocarbons in natural gas that are separated from the gas as liquids through the process of 

absorption, condensation, adsorption, or other methods in gas processing or cycling plants. 

Condensates are a natural gas liquid recovered from gas wells from lease separators or field 

facilities.

The Petroleum Intelligence Weekly data relies on company reports where possible, as well as other 

information sources provided by companies. However, estimates are generated for those companies

that do not release regular or complete reports. Estimates were created for most of the state-owned 

oil companies in the figure above.

Page 21 GAO-07-170 International Energy Cooperation
Figure 5: Top 10 Companies Based on Gas Production and Reserves Holdings, 

2004 

Source: GAO analysis of data from Petroleum Intelligence Weekly, Dec. 12, 2005.

Percentage

0

10

20

30

40

50

60

70

80

90

100

International oil and gas company

National oil and gas company

26%

74%

100%

Exxon Mobil (U.S.) 8%

Royal Dutch Shell (U.K./Netherlands) 7%

BP (U.K.) 7%

Total (France) 4%

Gazprom (Russia) 46%

National Iranian Oil Co. (Iran) 7%

Sonatrach (Algeria) 7%

Saudi Aramco (Saudi Arabia) 5%

Pertamina (Indonesia) 5%

Petroleos (Malaysia) 4%

Gazprom (Russia) 30%

National Iranian Oil Co. (Iran) 26%

QP (Qatar) 17%

Saudi Aramco (Saudi Arabia) 6%

Petroleos de Venezuela

(Venezuela) 4%

Sonatrach (Algeria) 4%

Rosneft (Russia) 4%

Iraq National Oil Co. (Iraq) 3%

Nigerian National Petroleum

Co. (Nigeria) 3%

Abu Dhabi National Oil Co. (U.A.E.) 3%

Top 10 oil and gas companies based

on gas reserves holdings, 2004

Top 10 oil and gas companies

based on gas production, 2004

Note: Natural gas is net or marketable output. 

Competition among consuming countries to procure oil and gas assets has 

also been affected by the growing participation of national oil and gas 

companies. Some energy experts stated that increased access to capital, 

combined with increased access to technical expertise available for hire 

from third-party service companies, has allowed these consuming 

countries’ national oil and gas companies to compete with the 

international oil companies in the global marketplace for energy 

resources. Additionally, with political leverage and potential financial 

support provided from their governments, some national oil and gas 

companies may be willing to operate at a lower discount rate and a 

potentially lower profit margin. For example, there has been an increasing 

trend by some national oil and gas companies from energy consuming 

countries such as Brazil, China, India, and Malaysia to become active, 

competitive bidders for acquiring exploration rights to energy resources in 

other producing countries. Some experts say these national oil and gas 

companies may benefit from increased financial support and political 

leverage in negotiations with the host supplier countries. 

Page 22 GAO-07-170 International Energy Cooperation
According to some agency officials and energy experts, there are two main 

concerns about participation of national oil and gas companies in the 

energy market. One concern is that some national oil and gas companies 

from consuming countries may not have the combination of capital,

technical expertise, and managerial expertise necessary to efficiently and

effectively develop certain oil and gas projects, preventing some of the 

production from getting to the global energy market in a timely manner. 

Some energy experts stated that a Chinese national oil and gas company,

for example, may have the capital to compete for the rights to explore for 

energy resources but may not have the technology and managerial 

expertise to develop some projects. Additionally, agency officials and 

energy experts expressed concern over the impact of national oil and gas 

companies procuring energy assets based on national policy goals rather 

than on commercial market business strategy. Whereas, international oil 

and gas companies typically seek to maximize returns, some national oil 

and gas companies’ operations may be driven primarily by their 

government’s energy policy interests and revenue requirements. This may 

result in (1) a national oil and gas company potentially preventing some or 

all of the production from the resource base under their control from 

getting to the global energy market in a timely way or (2) a national 

company entering into bilateral exploration based on foreign policy 

purposes. Some energy experts added that, although there may also be a 

net gain in the resulting energy supply on the market due to increased 

activity by national oil and gas companies from consuming countries, the 

ability of some of these companies to bring those energy assets to market 

is varied and remains a concern. 

National Oil and Gas 

Companies May Lack 

Resources to Develop Projects 

and May Inhibit Competition 

A second concern is that constrained investment climates in some 

producing countries’ energy markets will inhibit the investment necessary 

to ensure continued production and growth is maintained by the country’s

national oil and gas company. For some energy producing countries, the 

national oil and gas companies serve as a source of general government 

revenues and funding for social programs, and as a result can be marked 

under-investment in the company that is required to maintain the country’s 

energy output. In addition, some energy producing countries dominated by 

national oil and gas companies have failed to open their investment 

climates or reinvest sufficiently. Experts cited national oil companies in 

Russia, Mexico, Venezuela, and Indonesia as examples of oil sectors with 

constrained investment climates and insufficient government reinvestment 

in the energy sector. 

Page 23 GAO-07-170 International Energy Cooperation
Energy officials and experts state that more reliable energy market 

information is an increasingly important element for market stability. The 

reliability of oil and natural gas market information is questionable due to 

systemic factors such as reporting delays, definitional differences, and 

lack of transparency. In a tight energy market, the negative impacts of 

uncertainty in market information on planning and current and future 

needed investment are amplified. 

Energy experts and officials question the reliability of oil and natural gas 

market information in large part due to (1) concerns about historical 

demand and supply data based on a lack of timeliness in reporting, 

definitional differences, and national or industry sensitivities and (2) 

concerns about future demand and supply estimates based on unreliable 

historical data and insufficient transparency about projection assumptions 

and methodologies.22 For example, concerns about oil demand information 

include the following: 

Market Stability and 

Investment Require 

Reliable Energy 

Information 

Unreliable Market Information 

Contributes to Energy Market 

Uncertainties 

• Historical demand data: Uncertainty results from successive revisions of

data, a lack of timeliness in reporting, and questionable reliability of data, 

particularly from rapidly growing non-OECD countries such as China and 

India. Final demand data are generally available about 16-20 months after 

the reference year. By the time final data are reported, initial estimates 

may have been revised repeatedly. EIA officials also question the basic 

reliability of demand data for non-OECD countries like China and India. 

For example, Chinese demand estimates are derived from “apparent 

demand”—as a sum of estimated production and estimated net imports—

or on inference from Chinese gross domestic product (GDP) growth 

estimates.23 As an example of the uncertainty that results from such 

methods, the EIA indicated that Chinese oil demand had grown at roughly 

500,000 barrels per day in 2005, while a widely quoted Morgan-Stanley 

report indicated that Chinese demand had declined. 

• Projections: Uncertainty results from projected demand estimates that 

rely upon questionable historical data and that may not fully incorporate 

 22The IEA’s World Energy Outlook and the EIA’s International Energy Outlook are 

published annually and, according to energy experts, are widely considered industry 

standards for world oil market projections. Both agencies prepare a “reference” scenario

that forms the basis for their expected projections, as well as various “high-price” 

scenarios. In addition to these publications, both agencies are working to expand their 

analysis of energy market volatility in the future through other studies and analytical tools.

23Both the reliability of estimates on Chinese net imports and Chinese economic growth 

have also been questioned. 

Page 24 GAO-07-170 International Energy Cooperation
data revisions. For example, both the EIA and IEA use historical demand

and estimated economic growth as a basis for their demand projections. 

However, both the EIA and IEA forecasts failed to anticipate the surge in 

Chinese and global demand growth in 2004 due to the poor quality of 

Chinese data. According to economic experts, uncertainty in future 

demand is further compounded by insufficient transparency in EIA and 

IEA methodologies for projecting impacts of a high-price future. 

Concerns about oil supply information include: 

• Historical supply data: Uncertainty in production and stock (inventories) 

data results from the proprietary nature of the data, differences in 

definitions and conversion rates, and political sensitivities. According to 

the EIA, for example, OPEC countries often do not accurately report their 

current production levels. An EIA official reported that estimates of 

OPEC’s June 2006 crude oil production varied by over 700,000 barrels per

day, from a low of 29.3 million barrels per day by the Petroleum 

Intelligence Weekly, to 30 million barrels per day by the IEA. Reliability of 

OPEC production data is further complicated by OPEC quotas that are 

based on estimated reserves, which are suspected to have been inflated in 

order to generate higher quotas. For Russia, swings of up to 100,000 

barrels per day have occurred in its production data since Russian data do 

not break out gas condensate from oil production, and conversion rates 

for a combined stream are uncertain.

24 Production data for some countries 

may be inferred from combining oil exports, oil demand, and changes in

oil stocks. However, in addition to problems with demand data, oil stock 

data is incomplete and does not generally include stocks held in nonOECD countries (such as in China or India where stock data is considered 

a state secret) or in independent storage within OECD countries. In a 

previous GAO study, we found that missing stock data in IEA statistics, 

referred to as “missing barrels,” were present in 24 of 26 years between 

1973 and 1998.25 Both IEA and EIA data for 1999 through 2005 still 

reflected these gaps. 

• Projections: Uncertainty results from projected supply estimates that rely

upon questionable historical data and an unknown level of oil reserves. 

 24The EIA defines crude oil as a mixture of liquid hydrocarbons in natural underground

reservoirs that remain liquid after passing through surface separating facilities. Gas 

condensate is a mixture of heavier hydrocarbons recovered as liquids from natural gas. 

25See GAO, International Energy Agency: How the Agency Prepares Its World Oil Market 

Statistics, GAO/RCED-99-142 (Washington, D.C.: May 7, 1999). 

Page 25 GAO-07-170 International Energy Cooperation
For example, both the EIA and IEA use historical data as a basis of 

projecting future world demand and future non-OPEC supply. Then, both 

agencies assume that OPEC production will “fill the gap.” IEA and EIA 

projections call for around a 50 percent increase in current OPEC 

production, but there is growing debate over OPEC’s ability to meet this 

requirement. 26 Supply projections are also based on widely debated 

estimates of oil reserves due to differences within and between industry 

and governments about the definitions and measurement of “known,” 

“proven,” “probable,” or “undiscovered” reserves,27 the impact of 

technology on those reserves, and the rate of decline in certain oil fields. 

According to energy experts, uncertainty in projected supply is further 

compounded by insufficient transparency in EIA and IEA assumptions 

about the impacts of high prices on future production. 

Many of the concerns about oil demand and supply data also apply to 

natural gas data. Both the EIA and IEA have indicated the need to improve 

the timeliness and accuracy of natural gas demand, production, and stock 

information. Data reliability issues occur due to the increasing number of 

participants in natural gas markets, unspecified exports due to a multitude 

of small players, large increases in inter-regional trade and the loss of 

trade origin, longer supply chains, and industry sensitivities in response to 

increasing market competition. 

Reliable energy market information is important for reducing price 

volatility and facilitating planning and needed investment. For example, 

the EIA reported that unanticipated world oil demand growth in 2004 

contributed to depletion in oil stocks and resulted in the recent high oil 

prices. Uncertainty about demand growth also negatively impacts needed 

investment for future expansion of world oil and natural gas supplies 

(including an estimated $3 trillion in each sector from 2005 to 2030 by the 

IEA), particularly given the long lead times and payback periods required 

for such investments. Oil and natural gas producer nations have stated the 

need to better understand future demand in order to undertake costly 

investment—according to the OPEC Secretariat, uncertainty about future 

oil demand, future non-OPEC production, and needed OPEC investment is 

Reliable Energy Market 

Information Is Needed for 

Investment and Market 

Stability 

 26This debate is in part related to uncertainty over Saudi Arabia’s spare capacity level. 

27These terms reflect the degree of certainty to which estimated reserves exist and the

likelihood that such reserves can be profitably extracted. Other uncertainties have arisen

from recent announcements by major oil companies that they have lowered their reserve 

estimates. 

Page 26 GAO-07-170 International Energy Cooperation
the largest challenge facing the organization.28 Similarly, Russia’s Gazprom 

has indicated the need for future demand certainty, indicating possible 

supply curtailments if its European consumers seek to diversify their 

supplies away from Russia. Oil and natural gas consuming nations have 

also indicated the need for more certainty in future supply. This is 

particularly important given needed infrastructure investment in nonOECD countries to use natural gas—EIA projects that 73 percent of future 

natural gas demand will occur in countries outside the OECD—and 

needed worldwide investment to expand the use of LNG. 

The U.S. government has pursued emerging energy market issues through 

its participation in international energy cooperation forums; however, 

these forums, by their nature, can be constrained in the degree to which 

they can have an impact on these issues. The greatest constraint on the 

forums’ ability to impact energy issues comes from the sensitivity of 

sovereign nations to discussing their domestic energy policies. Forum 

efforts are also constrained by limitations in membership, consensusbased decision making, and voluntary participation. However, within these 

constraints, the United States has tried to mitigate energy market 

imbalances through efforts such as promoting emergency preparedness 

and outreach to developing countries. While the United States has not 

directly addressed the impact of the growing participation of national oil 

companies on the energy market at the forums, it has pursued related 

areas such as improving the investment climate. Finally, the United States 

has supported international efforts to improve energy information through 

various data sharing agreements, standardization, and capacity building—

though EIA involvement has for the most part been indirect and ad hoc, 

and U.S. data submissions to the IEA have lacked timeliness. 

International energy cooperation forums, by their nature, can be 

constrained in the degree to which they can have an impact on energy

market issues. The greatest constraint comes from the sensitivity that 

sovereign nations bring to discussing their domestic energy policies. 

Supplier countries may resist international efforts to increase 

opportunities for foreign investment in their energy sectors, and 

consuming countries, like the United States, may resist international 

Important Constraints 

Affect U.S. Ability to 

Address Key Energy 

Market Issues in

Forums 

Sensitivity of National 

Energy Policies Is the 

Overriding Constraint 

 28In their long-term strategy, OPEC examined various rates of projected oil demand to 2020

and estimated that their needed investment could vary from $230 billion to $470 billion. 

Page 27 GAO-07-170 International Energy Cooperation
efforts to influence their energy demand levels. For this reason, discussion 

of energy issues at international energy cooperation forums is almost 

always addressed through an agenda decided by consensus. This generally 

means that forums focus on noncontroversial issues, like energy efficiency 

and technology, according to U.S. officials. Forum efforts are also 

constrained by inherent limitations in restricted membership, consensusbased decision making, and the voluntary nature of participation and 

follow-up. 

For the United States, however, the consensus-based agenda does have the 

advantage of “de-Americanizing” some issues, according to U.S. officials.

In some cases, an issue or action may be more likely to be addressed on its 

own merits than if the United States is seen to be the primary force behind

it. Peer pressure can also be an important factor when a group of 

countries is endorsing an issue or approach. 

The United States has tried to mitigate the imbalances resulting from the 

recent tightening of the energy market through its participation in 

international energy cooperation forums. U.S. efforts have primarily 

focused on support for emergency preparedness, including development 

of strategic petroleum reserves and contingency plans. The challenges to 

these efforts lie in factors such as key developing countries not being 

members of the forum, such as China and India not having IEA 

membership, or in the voluntary nature of participation and follow-up. 

The United States has sought to address tight energy markets and 

associated market imbalances primarily by supporting emergency 

preparedness in both IEA and the APEC Energy Working Group. IEA is the 

premier forum at which the United States addresses emergency

preparedness. It has an emergency response plan—called “Coordinated 

Emergency Response Measures”—ready for use, supplemented by 

periodic emergency scenario planning exercises that allow member 

countries to practice how they would implement the plan in case of a real 

emergency. This IEA emergency response plan was used in response to 

Hurricane Katrina in September 2005, although such a situation had never 

been anticipated in IEA scenario planning. A senior IEA official told us 

that IEA’s response to Hurricane Katrina showed the market that IEA 

would act to mitigate supply shortfalls by releasing oil stocks. He said that 

IEA does not act to affect price but showed that it would act to affect 

supply, and this had helped restore confidence in the market. 

The United States Tried to 

Mitigate Imbalances from 

Recent Tight Energy 

Markets through Energy 

Forum Efforts 

Enhancing Emergency 

Preparedness 

Page 28 GAO-07-170 International Energy Cooperation
The United States has strongly supported the APEC Energy Working 

Group’s Energy Security Initiative, which is also designed to respond to 

the volatility resulting from the recent tightening of the market. Short-term

measures include improving the transparency of the global oil market 

through improvement of APEC energy data and participation in JODI, 

monitoring efforts to strengthen sea-lane security, implementing the RealTime Emergency Information Sharing System, and encouraging members 

to have emergency mechanisms and contingency plans in place. DOE’s 

policy and international affairs office and strategic reserve office both also 

worked with APEC Energy Working Group partners to identify best 

practices for strategic oil stocks. DOE then hosted a follow-up workshop 

in July 2005.

Another way in which the United States has tried to address market 

imbalances has been through outreach to major developing nations in both 

IEA and the APEC Energy Working Group. For example, IEA conducts a 

major outreach effort to developing countries and has established a 

separate office, the Office of Non-Member Countries, for this purpose. It 

has concluded “memoranda of policy understanding” to strengthen 

cooperation with China and India and has conducted numerous 

workshops, seminars, and training exercises.29 IEA held its first oil security 

workshop with China in 2001, at which it provided training in emergency 

response measures and strategic reserve management. China’s 5-Year Plan 

for 2000-2005 had raised the possibility of building a national strategic 

petroleum reserve, and it subsequently is building petroleum reserve tanks

and has begun filling them, according to DOE. IEA also invited China to 

attend its emergency response training and disruption simulation exercise 

in October 2004 and hosted a follow-up workshop with China on oil 

security in October 2006. IEA held a similar oil security workshop with 

India in 2004. It has also conducted numerous workshops and training 

efforts with Brazil, members of the Association of Southeast Asian 

Nations, and others. 

In contrast to IEA, U.S. outreach efforts to major developing countries at 

the APEC Energy Working Group are more direct since many of the major 

developing nations, such as China and Singapore, are members, providing 

Conducting Outreach to Major 

Developing Countries 

 29IEA’s workshops and seminars with China addressed energy efficiency, energy modeling 

and statistics, coal and investment, and electric power reform. IEA also jointly held a 

conference on Northeast Asia energy security and cooperation with the Korean Energy 

Economics Institute in Seoul, Korea. IEA also held workshops with India on efficiency 

standards, coal and electricity, and energy indicators. 

Page 29 GAO-07-170 International Energy Cooperation
a continuing opportunity to conduct outreach. The focus in the APEC 

Energy Working Group is on developing and sharing best practices and 

technology insights. 

The United States has also promoted best practices, training, and research 

across a broad range of energy issues. IEA and the APEC Energy Working 

Group both sponsor numerous conferences, workshops, and seminars 

designed to share information and technology and to encourage members 

to adopt practices and policies that are considered most beneficial. An 

example of this approach is the APEC Energy Working Group’s focus on 

best practices in developing an Asian LNG market. The United States 

hosted an APEC Energy Working Group workshop in San Francisco in 

March 2004 to identify best practices for LNG trade, which were later 

endorsed by members’ Energy Ministers. A follow-up workshop was held 

in Taipei in March 2005 to encourage acceptance of these best practices. 

That workshop resulted in the launch of an LNG Public Education and 

Communication Information Sharing Initiative to improve public 

understanding of the benefits of LNG, as well as to address safety 

concerns. 

These forums also conduct economic analyses and research projects. IEA 

annually publishes its flagship World Energy Outlook, which provides 

global long-term energy market analysis. It also conducts extensive energy 

policy analyses to promote conservation and the efficient use of energy, as 

well as increased use of alternatives to oil (energy diversification). The 

Asia Pacific Energy Research Centre also publishes studies of global, 

regional, and domestic energy demand and supply trends and related 

policy issues. In the area of research, IEA’s Energy Technology 

Collaboration Program currently sponsors more than 40 international 

collaborative energy research, development, and demonstration projects, 

known as “Implementing Agreements.” Their purpose is to help coordinate

national technology efforts so there are no redundancies of effort across 

participating countries, which can include nonmember countries.30

A final element of U.S. efforts to address market imbalances has been 

support for greater cooperation with producer countries. IEA’s Office of 

Non-Member Countries has conducted outreach activities with producer 

countries, as well as developing countries. It studies oil developments in 

Promoting Best Practices, 

Training, and Energy 

Technology Research 

Greater Cooperation with 

Producer Countries 

 30These projects are self-financed through voluntary contributions by the countries that 

decide to sponsor the research and, as such, are financed outside the IEA budget process. 

Page 30 GAO-07-170 International Energy Cooperation
major emerging non-OPEC regions such as Russia, the Caspian, and West 

Africa. For example, IEA has a memorandum of understanding with 

Russia and has conducted workshops and training with Russia. It 

completed an energy survey of Russia in 2002 that incorporated a review 

of its energy situation, policies, electricity regulatory reviews, and 

resulting recommendations. In addition, the United States participates in 

IEF, which is a producer-consumer dialogue that promotes the exchange

of information among all parties with an interest in the energy market. 

The challenges to these efforts to mitigate market imbalances lie in the

inherent constraints of each forum. Since IEA was established within the 

framework of OECD, a prerequisite for IEA membership is OECD 

membership, which means that the applicant country must be a 

democracy and have a market-based economy. This is one factor that 

complicates the issue of extending IEA membership to fast-growing, 

energy consuming countries like China. Another complicating factor is the 

requirement that IEA members hold at least 90 days of oil reserves, which

would be difficult for most developing countries to achieve.31 For IEA, 

deepening relations with nonmember countries is a delicate balancing act. 

A senior IEA official said that IEA wants to improve its relationship with 

developing countries like China and India—and, in fact, is considering 

how to offer them observer status—but it also does not want to give away

the equivalent of membership without these countries having to meet the 

basic requirements of membership. 

Another inherent limitation to what can be achieved in these forums is 

that participation and follow-up are voluntary. Apart from IEA’s treaty 

obligations related to emergency preparedness (i.e., holding 90 days of oil

reserves), IEA and APEC Energy Working Group activities are voluntary, 

and decisions are made by consensus. These forums can take steps to 

strongly encourage actions by members but cannot compel them. For 

instance, IEA country reviews, conducted every 4 years for each member, 

examine their energy policies and make recommendations. Two years 

later, brief standard reviews update the main energy developments and 

report on progress in implementing the recommendations. But, it is up to 

each country whether, and to what degree, it will take the recommended 

steps. 

Challenges to Efforts to 

Mitigate Market Imbalances 

 31The commitment is to hold at least 90 days of net imports of the preceding calendar year. 

Apart from the technical difficulties of building and managing a strategic petroleum 

reserve, it would be very expensive at current oil prices, and it could potentially further 

increase oil prices by putting greater demand pressure on the market. 

Page 31 GAO-07-170 International Energy Cooperation
U.S. Has Addressed Impact 

of Growing Participation 

of National Oil Companies 

by Pursuing Related Areas 

Such as Investment 

Climate 

The international energy forums do not directly address the impact of the

growing participation of national oil companies on the energy market. The

forums, however, do focus on the development of open, competitive 

energy markets within countries. Opening the investment climates in 

energy producing countries can provide increased access and competition 

for the international energy companies. However, forum efforts are 

constrained by inherent limitations in consensus-based decision making, 

membership, and voluntary participation. 

Both DOE officials and the Executive Director of the IEA stated that 

contributing to opening up energy investment climates is a high priority at

the IEA and is an issue that has significant overlap with the emerging 

influence of national oil companies. The IEA Offices of Long-Term 

Cooperation and Non-Member Countries conduct in-depth reviews of the 

energy policies of both IEA member countries and nonmember countries 

to focus on their investment climate status and related regulatory reforms. 

The IEA Shared Goals32 of participating member countries are in part 

based on the establishment of free and open markets as a fundamental 

starting point. For reviews of nonmember countries’ energy policies, the 

IEA provides observations on the status of a country’s investment climate 

and the regulatory reforms needed to enhance competitive access to its 

domestic energy markets. For example, the IEA conducted a 2002 Russia 

Energy Survey that identified the need for regulatory and legislative 

reform within Russia and focused on increasing competition and on 

opening its energy markets. Similarly, the IEA has also performed reviews 

of some of China’s energy sectors that have focused on market

liberalization and the transparency of the country’s oil market and related

transactions, among other issues. 

Other international energy forums also contribute to encouraging the 

development of open investment climates and competitive access 

opportunities within member countries. For example, NAEWG focuses on 

improving the integration of the energy economies of Canada, Mexico, and 

the United States through data and information sharing across 

government-owned and privatized energy sectors. In addition, one DOE 

official stated that NAEWG efforts to demonstrate the benefits of open 

markets and expose the tight nature of gas supplies in North America, 

limiting the amount and affecting the price of pipeline supplied gas that 

would be available to Mexico, supported the development of the LNG 

Encouraging Open Investment 

Climates Is a Priority in the 

Energy Forums 

 32Adopted by IEA Ministers in 1993. 

Page 32 GAO-07-170 International Energy Cooperation
market as a significant private investment opportunity for companies in 

what is primarily a government-owned energy sector in Mexico. The APEC 

Energy Working Group also encourages APEC member economies to 

create conditions to facilitate energy infrastructure investment through its 

Energy Security Initiative. For example, the APEC Energy Working Group 

developed a list of best practices for member countries to follow in 

financing energy infrastructure projects so as to develop a competitive 

energy investment climate. 

The goals and processes of the international forums do not lend 

themselves to directly addressing the impact of the growing participation 

of national oil companies on the energy market. U.S. agency officials and 

energy experts stated that the consensus approach and limitations of 

membership in the international energy forums covered in this review 

create challenges to addressing this emerging energy market issue. Related 

efforts for more open investment climates, such as through the IEA 

country reviews, or APEC Energy Working Group’s development of 

investment best practices, have also been hindered by the voluntary nature 

of members’ responses to forum recommendations. 

The contentious nature of the topic of growing participation of national oil

companies on the energy market conflicts with the general approach of 

the international energy forums in achieving consensus on the energy 

issues covered. DOE and Department of State officials stated that an 

international energy forum is not an appropriate venue for addressing 

potentially contentious issues because a forum’s studies and action items 

are agreed to by consensus. Some energy experts interviewed also 

questioned what, if any, role the international energy forums can play on 

this issue. These experts emphasized that the international energy forums 

are essentially organizations that allow for gathering and exchanging of

important energy data and information, but they do not have either the 

negotiating leverage or the focus needed to address this particular issue. 

One expert added that the increasing influence of national oil companies 

in the international oil markets may create a competition issue among the

private sector players in the market, but it is not a problem for energy 

security or an issue that the international energy forums should or can 

address directly. 

Limited membership in the international energy forums also inhibits 

addressing the impact of the growing participation of national oil 

companies on the energy market directly. Some of the major players 

influencing the topic, such as China and India, are not active participants 

in the discussion. For example, national oil companies from China and 

Efforts Are Constrained by the 

Goals and Processes of the 

Forums 

Page 33 GAO-07-170 International Energy Cooperation
India have been increasingly active in oil and gas exploration by pursuing 

a policy of procuring access to energy resources in various countries 

around the world. However, both have not been active members in the 

international energy forums. Similarly, Russia is one of the most influential 

energy producing countries in the world, with its domestic energy market 

dominated by national oil companies; but, it has not been an active 

participant in any of the major international energy forums. 

Related efforts for more open investment climates are hindered by the 

voluntary nature of members’ responses to forum recommendations. 

International energy forums like the IEA make recommendations for 

member countries and observations for nonmember countries to follow in 

order to move to market pricing and open up their investment climates. 

However, the forums lack the authority or mandate to require that these 

recommendations actually be implemented. For example, despite 

consistent recommendations to open up its energy markets from both 

multilateral and bilateral forums, Russia has actually reversed the 

liberalization of its energy sector and investment climate over the last 2 

years. According to DOE and IEA officials, its energy sector is now less 

efficient, and the investment climate has worsened. Similarly, despite the 

IEA’s efforts to engage Mexico in participating in a review of its energy 

policies, Mexico has shown no interest in the review or implementation of 

the recommendations that typically result. 

Improved energy market transparency is an important theme for each of 

the major international energy forums. Through its participation in the 

forums, the United States has supported improving energy information 

with measures such as data sharing, data standardization, and capacity 

building (i.e., improving a country’s ability to collect and analyze energy 

data). However, forum efforts often remain challenged in improving data

quality and timeliness, for example, due to authority limitations and 

continued capacity needs in developing countries. Additionally, U.S. 

support for forum efforts has not benefited from consistent use of EIA 

expertise, and the United States has not provided timely data submissions 

to the IEA. 

International energy cooperation forums aim to facilitate the sharing and 

collection of information across multiple governments. JODI is one key 

data sharing effort and includes monthly oil data for over 90 countries, 

U.S. Has Supported 

International Efforts to 

Improve Energy Data 

within Authority and 

Capacity Boundaries 

Improving Information Is a Key 

Forum Goal

Page 34 GAO-07-170 International Energy Cooperation
representing around 95 percent of global demand and supply.33 IEA 

officials report that, through JODI, the international community is able to

view timelier world oil data and assess the current quality of that data.

Forum officials also reported that JODI was receiving high-level political

support and contributing to increased transparency in some cases—China 

has begun collecting and releasing some data on changes in levels of oil 

stocks to IEA, and the IEA “Oil Market Report” is now incorporating 

timelier OPEC production data. Additionally, through JODI, IEA and APEC 

are working to standardize data collection by agreeing to use the same oil 

market questionnaire. Both organizations are also considering developing 

a similar natural gas data initiative in the future. 

In addition to data sharing and standardization, the forums have several 

efforts to improve energy information through capacity building. Such 

efforts include IEA memorandums of understanding with China and India 

to improve data sharing, the IEA Energy Statistics Manual, and the 2005 

and 2006 G-8’s political endorsements of the Extractive Industries 

Transparency Initiative through which data is collected on developing 

country revenues from extractive industries. 

While the United States has supported forum efforts to improve 

international energy information, EIA expertise has not been leveraged in

a consistent manner beyond the data exchange activities, as discussed 

above. For example, the United States supports forum initiatives such as 

JODI or NAEWG statistical sharing, and EIA is a member of the IEA 

Energy Statistics Workgroup that develops reporting standards for IEA 

data submissions. The United States also supports the Extractive 

Industries Transparency Initiative through U.S. Agency for International 

Development funding and through participation in an International 

Advisory Group. However, when asked about consistent leveraging of EIA 

expertise for forum efforts to improve the quality and reliability of 

international data, a senior EIA official described the administration’s 

involvement as indirect and ad hoc. For example, while EIA has provided

briefings and analysis to DOE’s policy office for its cooperation efforts, 

EIA has not been directly and consistently involved with international 

forum initiatives to improve data collection efforts in other countries or in 

training workshops. The EIA official also described EIA’s participation as

increasing and decreasing with staff availability. International cooperation

U.S. and Forum Efforts to 

Improve Information Face 

Important Challenges 

 33The JODI world database was opened to the public in 2005 and is a relatively new data

effort. 

Page 35 GAO-07-170 International Energy Cooperation
has been a small part of EIA’s overall mission; however, given the 

importance of reliable international energy data for market stability and 

the emphasis on comprehensive and timely energy data reporting in the 

National Energy Policy, we believe that EIA’s expertise can contribute to 

enhanced international energy data improvement efforts. 

Another challenge for international cooperative efforts to improve energy 

market data is the fact that the forums must depend on independent 

member countries to be responsive. According to IEA officials, the IEA is 

criticized for providing annual statistical publications that are 18 months 

old. These officials believe that the IEA could publish annual data with 

only a 9-month lag if member countries submitted their data within 

requested time frames. However, according to the IEA officials we met 

with, several countries do not meet the requested time frames—including 

the United States. For 2004 annual data, for example, the United States 

had not provided its complete data submission to the IEA until March 17, 

2006, although the data was requested by September 30, 2005.

34 According 

to a senior EIA official, the United States is unable to meet IEA’s requested 

time frames, however, due to a national schedule for data collection that 

does not correspond with the IEA’s data collection schedule and the fact 

that the United States may have to wait for data from industry entities 

such as the American Petroleum Institute. The United States anticipates 

submitting 2005 annual data to the IEA by February 2007 (around 4 

months after the requested date but earlier than the previous year’s 

submission). 

Authority limitations also challenge international cooperative efforts to 

collect detailed and consistent information on oil reserves and production

levels. Energy experts have emphasized the need for international field-byfield production data and a better understanding of future oil resources, as 

well as the true cost of developing them. Currently, however, reserve 

estimates are unaudited figures, and there are no common informational 

 34The United States submitted around two-thirds of its data by the end of January 2006 and 

the remaining one-third of data by March 17, 2006. The IEA prepares report cards for each 

of its members that record data timeliness, completeness, and overall quality. On its most 

recent report card, the United States was rated “poor” for timeliness—the lowest rating 

achievable— due to submissions provided more than 2 months after requested. The United 

States received high ratings in other areas. 

Page 36 GAO-07-170 International Energy Cooperation
disclosure requirements for reserves under international accounting 

standards.35

Capacity limitations, particularly in emerging market economies, are 

another challenge for international cooperative efforts to improve energy 

market information. While establishment of JODI has generally been 

considered a success by forum participants, periodic quality reviews of the 

database reveal a mixed record of improvement, for example. When asked 

about JODI data reliability, U.S. and IEA officials report that data from 

developing countries may lack reliability due to capacity limitations and 

that, despite organizational efforts to support JODI, the forums must 

ultimately rely on the political will of countries to improve and share their 

data.36

Exacerbating capacity limitations, the IEA has also emphasized challenges

resulting from rapidly expanding data demands. According to IEA officials, 

interest has grown in information on natural gas, renewable energies, and 

energy efficiency. Additional statistical resources may be needed to 

acquire such information from new markets—many of them smaller and 

more dispersed, such as with renewable energies like biofuels—and to 

provide data at a more detailed level, such as within the household on 

energy use by vehicle or appliance. IEA reports that statistical resources to 

fill these additional needs are insufficient. 

Both oil importing and oil exporting countries seek stable, predictable 

energy markets to support continued economic growth. Oil importing 

countries, such as the United States and China, are concerned about 

security of oil supply. Over the past few years, the unanticipated growth in 

demand for oil has outpaced the growth in oil supplies. Oil exporting 

countries have not been able to increase supply levels accordingly, and 

spare capacity has declined to the point where political, economic, and 

weather-related events can have disruptive effects on the market. 

Increasing future supplies of crude oil and refined oil will require high 

Conclusions 

 35According to energy experts, the Securities and Exchange Commission system for reserve 

disclosure is based on outdated definitions of reserves and technology such that there is a

growing divergence between what is reported under the Securities and Exchange 

Commission and how companies, using more modern technologies and tools, assess their 

own reserve position. 

36To support continued data improvement, the organizations are preparing a JODI manual 

and JODI training sessions. 

Page 37 GAO-07-170 International Energy Cooperation
levels of investment and technical expertise because new discoveries are 

expected to take place in remote, offshore, and often politically risky 

locations. In some of these locations, the producing country lacks the 

capital and expertise to develop the resources and also lacks a predictable 

investment climate, open to foreign investment—thus raising questions 

about when potential supplies might come to the market. Energy market 

experts expect the tight supply situation to continue in the medium and 

long term. 

At the same time, oil exporting countries are concerned about the security, 

or predictability, of oil demand. In the 1990s, demand for oil was affected 

by a global economic slowdown, including the Asian financial crisis of 

1997-1998, and oil exporters experienced generally low oil prices. With 

exploration costs so high now, some exporting countries are concerned 

about committing to long-term investment projects without clear 

indications of demand predictability. 

International cooperation among importers and exporters can be founded 

on the recognition that each group has a shared interest in market 

stability. If the market does not provide this stability and questions about 

demand and supply growth persist, “cooperation” may move more in the 

direction of bilateral agreements covering oil and gas exploration and 

pipeline routes. Such agreements may be perceived as excluding other 

countries. 

International forums can serve an important overall purpose in providing 

the opportunity for oil importers and oil exporters to discuss common 

interests and concerns. The forums have not directly addressed matters 

that involve sovereign, sensitive decisions—such as Mexico’s foreign 

investment prohibitions or the competitive practices of some national oil 

companies—but they do serve to keep channels of communication open

and improve understanding of various members’ concerns. By working on 

matters of interest to forum members—such as technical advice on 

emergency preparedness and management of strategic petroleum reserves 

and on ways to achieve cleaner, more efficient energy production—they 

can build on shared interests and contribute to the longer-term 

remediation of the demand-supply imbalance that has caused volatile 

prices. 

International forums can serve another critical role by improving energy

demand and supply statistics to facilitate investment planning. In 

examining concerns about current energy market issues, a common thread

is that more reliable energy market information is increasingly important 

Page 38 GAO-07-170 International Energy Cooperation
for market stability, as well as to facilitate investment planning. As 

recognized by the National Energy Policy report, comprehensive and 

timely world energy data are needed. While the United States has provided

important leadership in international emergency preparedness and the 

establishment of energy information systems, with the increased 

importance of reliable energy market information in a tight market, a 

greater effort may be needed to improve energy statistics. 

To enhance the impact of international cooperation for improving energy 

statistics needed for market stability and investment, we recommend that 

the Secretary of Energy emphasize the priority of improving energy 

information efforts within the international forums, particularly by taking 

the following two actions: 

• examining how EIA expertise can contribute to international forum data 

efforts, and 

• examining how U.S. data submissions to the IEA can be made more timely. 

We provided a draft of this report to DOE and the Departments of 

Commerce and State. All three agencies provided written comments, 

which are reproduced in appendixes IV, V, and VI, respectively. The 

Department of Commerce agreed with our recommendations. The 

Department of State provided information in its letter about steps it has 

recently taken, through organizational changes, in order to highlight the

importance of global energy challenges. 

DOE stated that the U.S. government has been actively engaged in 

international energy forums to advance U.S. energy security objectives and 

that our report makes many valuable points regarding the nature and the 

potentials of various international forums in which it participates. DOE 

also stated that our report adds to the greater understanding of the U.S. 

commitment to international energy cooperation.

DOE disagreed with our characterization that EIA expertise has not been

leveraged in a consistent manner to improve international energy data

through the multilateral forums. DOE emphasized that EIA has been an 

active member in each of the four international forums that are the focus 

of this report. However, DOE also acknowledged that funding issues have 

constrained EIA efforts to assist other countries to improve their energy 

data and that this is an area where additional funding would be useful. We 

Recommendations for 

Executive Action 

Agency Comments 

and Our Evaluation 

Page 39 GAO-07-170 International Energy Cooperation
have modified our report language to emphasize that EIA has been more 

active in data exchange activities rather than efforts to assist other 

countries in data collection and modeling, such as through training 

workshops. 

DOE expressed concern with our description of how U.S. data 

submissions to IEA have not been timely, and it provided additional details 

about several timeliness issues. We have modified our report language to

incorporate these clarifications. Additionally, while we recognize the 

challenge for improving U.S. data submissions due to an EIA survey 

schedule that does not correspond with IEA’s scheduled due dates, we 

maintain our recommendation that DOE examine ways to improve the 

timeliness of U.S. data submissions. One consideration could include the 

suggestion provided in DOE’s comments to this report that the IEA use 

EIA miniquestionnaires and monthly submissions to generate preliminary 

U.S. data. 

Finally, DOE stated that it was concerned that GAO asserts that more data 

and more timely data will resolve energy market and security issues. GAO 

makes no such assertion. Our findings highlight the increased importance 

of reliable energy market information in a tight market and, therefore, we 

recommend that DOE give greater priority to improving energy

information efforts within the international forums. We specifically 

recommend that DOE address two relevant areas in which we saw 

opportunities for improvement, by examining how EIA expertise can be 

better leveraged and by examining how U.S. data submissions to IEA can 

be made more timely. Improving energy statistics is one important way in 

which the international forums can enhance the impact of international 

cooperation, especially as regards global energy market transparency. 

DOE and the Departments of Commerce and State also provided technical 

comments, which we have incorporated where appropriate. 

We are sending copies of this report to interested Congressional 

Committees and to the Departments of Commerce, Energy, and State. We

also will make copies available to others upon request. In addition, this 

report will be available at no charge on the GAO Web site at 

http://www.gao.gov. 

Page 40 GAO-07-170 International Energy Cooperation
If you or your staff have any questions about this report, please contact me 

at (202) 512-4128 or yagerl@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix VII. 

Sincerely yours, 

Loren Yager

Director, International Affairs and Trade 

Page 41 GAO-07-170 International Energy Cooperation
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

To determine how the U.S. government participates in international energy

cooperation forums, we reviewed: (1) the key international energy forums 

in which the U.S. pursues energy cooperation, (2) the key emerging energy

market issues that are important for international energy cooperation, and 

(3) how the United States is addressing these issues through its 

participation in these forums. 

Our review focused mainly on the following key international energy 

cooperation forums: the International Energy Agency (IEA), the Asia 

Pacific Economic Cooperation (APEC) Energy Working Group, the North 

American Energy Working Group (NAEWG), and the International Energy 

Forum (IEF). We neither evaluated these forums and their impacts on 

energy policy and the global energy market nor did we evaluate U.S. 

energy policy goals, which are based on private sector approaches. Rather, 

we reviewed the forums’ mission, structure, and activities. In addition, our 

review focused on the oil and natural gas sectors of the energy market. 

These sectors provide the bulk of current energy traded in the market. For 

this reason, the nuclear, coal, renewable, and alternative energy sectors 

were outside the scope of our review. 

To determine how the United States pursues energy cooperation in key 

international energy forums, we reviewed documents and interviewed 

officials responsible for international energy cooperation at the 

Departments of Energy (DOE), State, and Commerce. We conducted 

fieldwork at the IEA and the U.S. Mission to the Organization of Economic 

Cooperation and Development (OECD) in Paris, France, where we 

reviewed documents and interviewed officials. We also exchanged 

correspondence with the Secretariat of the APEC Energy Working Group 

and conducted telephone interviews with U.S. members of the IEA and 

APEC Energy Working Group business advisory groups. In addition, we 

interviewed several private sector energy experts and industry 

representatives. While we had planned to conduct fieldwork in Mexico 

City, Mexico, and Ottawa, Canada, with Mexican and Canadian 

government officials responsible for NAEWG, we did not conduct this 

fieldwork because the Department of State declined to facilitate our 

access to these officials.

To identify the key emerging issues in the international oil and natural gas

markets in the past 5 years that are important for international energy

cooperation, we reviewed documents and data and interviewed officials at 

DOE and the Departments of State and Commerce. We also reviewed 

relevant reports and studies, including past GAO reports, and discussed 

them with energy experts. We developed a list of three key emerging 

Page 42 GAO-07-170 International Energy Cooperation
Appendix I: Objectives, Scope, and 

Methodology 

issues and verified them with agency, forum, and energy industry officials. 

We did not seek to independently verify the nature and extent of these 

energy market changes but rather relied on analysis by energy experts, 

officials, and key market studies, as well as prior GAO work. Our report 

discusses various reliability concerns with international oil and gas data. 

While data improvement is required, we believe key international data,

such as that from the DOE’s Energy Information Agency is sufficiently 

reliable to indicate broad trends in world demand and supply.

To determine how the United States is addressing these emerging energy 

market issues through its participation in these forums, we reviewed 

documents and interviewed officials at DOE and the Departments of State 

and Commerce, as well as at IEA, the APEC Energy Working Group, and 

their business advisory groups, and private sector energy experts. 

We conducted our work from January 2006 to November 2006 in 

accordance with generally accepted government auditing standards. 

Page 43 GAO-07-170 International Energy Cooperation
A

Bilateral E

ppendix II: July 2006 G-8 Summit and

nergy Cooperation Forums 

Page 44 GAO-07-170

Appendix II: July 2006 G-8 Summit and 

Bilateral Energy Cooperation Forums 

In addition to the international energy cooperation forums discussed 

previously, we also reviewed the July 2006 Group of Eight (G-8) Summit 

held in St. Petersburg, Russia, which functioned as an ad hoc forum 

focused on energy security, and U.S. participation in several selected 

bilateral energy cooperation forums, which comprise an important part of 

U.S. energy security and cooperation efforts. We focused on bilateral 

energy cooperation with five key nations: Canada, China, India, Mexico, 

and Russia. 

The G-8 is an unofficial forum of the heads of the leading industrialized 

democracies—Britain, Canada, France, Germany, Italy, Japan, Russia, and

the United States, where the European Commission is also represented 

and fully participates. One of the priority themes of the July 2006 G-8 

Summit, hosted by Russia, was to formulate political commitments of the 

member states toward enhancing global energy security. 

The G-8 is not an international organization based on an international 

agreement and does not have formal admission criteria, a charter, or a 

permanent secretariat. G-8 summit meetings are held regularly in the 

partner states, and the host country acts as the Chair of G-8 for a calendar 

year. Russia has chaired the G-8 during 2006. The Chair organizes the 

summit and ministerial meetings and the expert and working meetings, 

manages the agenda, and coordinates the routine work of the group. At the 

summit meetings, discussions of the heads of state and government are 

held behind closed doors with decisions adopted by consensus. 

In preparation for the July 2006 G-8 Summit, the G-8 Energy Ministers met 

in March 2006 to discuss issues such as global energy security, energy

efficiency, and energy saving. This meeting also included Energy Ministers 

from Brazil, India, China, Mexico, and South Africa, as well as 

representatives of the World Bank, the Organization of Petroleum 

Exporting Countries, the International Atomic Energy Agency, IEA, and 

the International Energy Forum. The July 2006 G-8 Summit resulted in the

St. Petersburg Plan of Action, which is a high-level commitment on behalf

of the G-8 members to enhance global energy security through efforts 

across several related issue areas, such as increasing the transparency and 

stability of global energy markets, improving the investment climate in the 

energy sector, and ensuring physical security of critical energy

infrastructure. 

July 2006 G-8 Summit, 

Hosted by Russia, Was 

Focused on Energy 

Security 

International Energy Cooperation
Appendix II: July 2006 G-8 Summit and

Bilateral Energy Cooperation Forums 

The United States participates in many bilateral energy cooperation 

forums; we reviewed five selected bilateral forums—those with Canada, 

China, India, Mexico, and Russia. According to a DOE official, bilateral 

energy cooperation forums tend to address focused issues that may be of

specific interest to the two parties. DOE and the Departments of 

Commerce and State play a role in the bilateral energy cooperation 

forums, with DOE personnel often co-chairing many of the working groups 

involved in the efforts. In some bilateral energy cooperation forums 

private industry is included in the discussion of certain issues, whereas 

other bilateral energy cooperation forums mainly focus on high-level 

dialogue between government representatives on energy policies and 

initiatives. The following are examples of some of the main bilateral 

energy cooperation forums: 

Bilateral Energy 

Cooperation Forums Allow 

Focused Attention on 

Issues of Interest 

• The DOE official responsible for managing U.S. participation in the U.S.-

China Energy Policy Dialogue stated it was established in 2004 for highlevel dialogue between the two countries on energy issues such as energy

policy, energy efficiency measures and related technologies, renewable 

energy, and energy sector reforms. Other areas of focus have included 

shared concern over supply security and energy transport issues. The U.S.-

China Oil and Gas Industry Forum, established in 1998, is a public-private 

bilateral relationship involving government and industry representatives 

from both countries. The forum is driven by consensus-based dialogue on

commercial policy and on common goals such as development of secure, 

reliable, and economic sources of oil and natural gas while facilitating 

investment in the energy industry.1

• The DOE official responsible for managing U.S. participation in the U.S.-

India Energy Dialogue stated it was established in 2005 with the primary 

goal of promoting energy security, increasing trade and investment in the 

energy sector, and deploying clean energy technologies. This forum 

consists of a steering committee and five working groups focused on oil 

and gas, power and energy efficiency, coal, new technology and renewable 

energy, and a civil nuclear initiative. Negotiations on a memorandum of 

understanding on energy information exchange began in 1996 and it was 

signed in February 2006.

• According to DOE, the U.S.-Canada Energy Consultative Mechanism was 

established in 1979 as a means for discussing key energy issues of interest 

 1

The U.S.-China Energy Policy Dialogue is led by DOE. The U.S.-China Oil and Gas Industry

Forum is led by DOE in conjunction with the Department of Commerce. 

Page 45 GAO-07-170 International Energy Cooperation
Appendix II: July 2006 G-8 Summit and

Bilateral Energy Cooperation Forums 

or concern to the United States and Canada. The two federal governments 

meet annually to share policy positions, identify areas of potential dispute, 

and clarify understanding on energy issues without requiring 

commitments regarding future actions. Subject areas usually covered 

include world oil market developments; domestic policy developments; 

and bilateral oil, natural gas, electricity, and nuclear issues. 

• According to DOE, the U.S.-Mexico Binational Commission2 Energy 

Working Group was established in 1996 as one of 16 working groups under 

the commission and includes issues of bilateral interest such as energy

policy and legislative developments in each country, cross-border natural 

gas and electricity issues, science and technology cooperation, and world 

oil market developments. The Energy Working Group meets as requested 

by either country, but, in recent years, bilateral energy issues have been 

taken up under the auspices of the North American Energy Working 

Group. 

• The DOE official responsible for managing U.S. participation in the U.S.-

Russian Energy Dialogue stated it was established in 2002 and brought 

under its umbrella the U.S.-Russian Energy Working Group that had been 

established in 2001. The goal of this forum is to promote energy efficiency,

alternative energy, data exchange, energy technology initiatives, and 

energy trade between the two countries while reducing barriers to 

investment in the energy sector. The bilateral energy forum originally met 

two times each year but, in 2005, reduced this to one meeting each year. 

 2

 The U.S.-Mexico Binational Commission was established in 1981 by then-Presidents

Reagan and Lopez-Portillo to serve as a forum for regular meetings at the cabinet level on a 

wide range of issues critical to U.S.-Mexico relations. 

Page 46 GAO-07-170 International Energy Cooperation
Appendix III: Role of Natural Gas Is Appendix III: Role of Natural Gas Is Increasing in Tight Energy Market 

Increasing in Tight Energy Market 

While the tightening of the world energy market in recent years has mostly

been the story of the world petroleum market, there have also been 

important developments in the natural gas market. Many countries have 

increasingly relied on natural gas. For instance, while the European 

Union’s dominant fuel in 2003 was oil, accounting for 40 percent of energy

demand, natural gas has been the fastest growing fuel over the past decade

and accounted for 24 percent of energy demand in 2003, according to the 

Energy Information Administration (EIA). Historically, natural gas has not

been a major fuel in China, but its share in the country’s energy market is 

rapidly increasing, almost doubling from 1997 to 2004, according to EIA. 

While natural gas only accounted for about 3 percent of total energy 

consumption in China in 2004, this share is expected to increase. 

The natural gas market has long been dominated by pipelines that deliver 

the natural gas from producers to consumers. For instance, 85 percent of 

U.S. natural gas imports were provided through natural gas pipelines from 

Canada in 2005. Much of Europe is served by pipelines from Russia, which 

provides around two-thirds of its imports. However, a gas supply pricing 

conflict between Russia and Ukraine in late December 2005 resulted in 

Russia’s Gazprom shutting off gas supplies to Ukraine on January 1, 2006,

resulting in an energy crisis for all of Europe. Although Russia had 

threatened a cutoff to demand higher natural gas prices in recent years, 

this was the first time that a supply disruption had affected flows to 

Europe. While the immediate crisis was soon resolved, the incident deeply 

undercut Europe’s sense of energy security. 

The United States was the largest consumer of natural gas in 2004, with 

about 23 percent of world demand. Russia had the second largest demand. 

Germany, in third place, had about a quarter of Russia’s level of demand. 

Figure 6 shows the top world natural gas consumers in 2004. 

Page 47 GAO-07-170 International Energy Cooperation
Appendix III: Role of Natural Gas Is 

Increasing in Tight Energy Market 

Figure 6: Top World Dry Natural Gas Consumers, 2004 

Notes: Dry natural gas is also known as consumer-grade natural gas. 

Figure 6 includes all countries that consumed more than 2 trillion cubic feet in 2004. Total world 

demand was 99.7 trillion cubic feet. 

However, as figure 7 shows, Germany’s net imports accounted for 80 

percent of its natural gas demand in 2004, while this share was only 15 

percent for the United States. Of the seven top natural gas importers, six 

depended on imports for more than 75 percent of their demand—including 

Ukraine, which met about 78 percent of its natural gas demand through 

imports. 

0

2

4

6

8

10

12

14

16

18

20

22

24

Saudi

Arabia

United Canada Ukraine Iran Japan Italy

Kingdom

United Russia Germany

States

Natural gas consumption (trillion cubic feet)

Source: GAO analysis of EIA data.

23% 16% 4% 3% 3% 3% 3% 3% 3% 2%

Natural gas consumption as share of total world (percentage)

Page 48 GAO-07-170 International Energy Cooperation
Appendix III: Role of Natural Gas Is 

Increasing in Tight Energy Market 

Figure 7: Top World Dry Natural Gas Net Importers, 2004

Notes: Dry natural gas is also known as consumer-grade natural gas. 

Figure 7 includes all countries whose net imports were more than 1 trillion cubic feet in 2004. 

South Korea’s net imports were more than 100 percent of its natural gas demand because it was 

increasing its natural gas inventories. 

In terms of natural gas production, Russia was the largest producer, with 

about 23 percent of total world production, as shown in figure 8. The 

United States accounted for 19 percent of total production. Canada, in a 

distant third place, produced about 7 percent of total production. 

Dry natural gas net imports (trillion cubic feet)

Source: GAO analysis of EIA data.

0

1

2

3

4

5

South

Korea

United Germany Japan Italy Ukraine France

States

0

50

100

150

Net dry natural gas imports as share of that country’s dry natural gas demand (percentage)

15%

80%

97%

84% 78%

97%

104%

Page 49 GAO-07-170 International Energy Cooperation
Appendix III: Role of Natural Gas Is 

Increasing in Tight Energy Market 

Figure 8: Top World Dry Natural Gas Producers, 2004 

Notes: Dry natural gas is also known as consumer-grade natural gas. 

Figure 8 includes all countries that produced more than 2 trillion cubic feet in 2004. Total production 

was 98.6 trillion cubic feet in 2004.

Until recently, as long as most natural gas was delivered by pipelines that 

required geographic proximity, there was not the possibility of developing

a global market in which gas could be shipped to customers not connected 

with a pipeline. This has changed recently with the growing development 

of a liquefied natural gas (LNG) market, which is made possible because 

LNG can be shipped via LNG tankers that can go anywhere in the world 

where there is an LNG regasification terminal. LNG technology is not 

new—it had declined by the 1980s in the United States, for example, in 

part because it could not compete with lower priced domestic natural gas 

provided through pipelines. However, interest in LNG imports has been 

renewed due to higher U.S. natural gas prices in recent years, along with 

increased competition, and advances in LNG technology that have lowered 

its costs, according to EIA. LNG is expected to be particularly valuable for 

0

2

4

6

8

10

12

14

16

18

20

22

24

Natural gas production (trillion cubic feet)

Source: GAO analysis of EIA data.

23% 19% 7% 3% 3% 3% 3% 3% 3% 2% 2% 2% 2%

Natural gas production as share of total world (percentage)

Turkmenistan

Uzbekistan

Malaysia

Saudi 

Arabia

Indonesia

Algeria

Norway

Iran

Netherlands

United 

Kingdom

United 

S

Canada

tates

Russia

Page 50 GAO-07-170 International Energy Cooperation
Appendix III: Role of Natural Gas Is 

Increasing in Tight Energy Market 

so-called “stranded” natural gas reserves, which are located in areas too 

remote from major demand centers to affordably be developed using 

pipelines. 

In 2005, Japan was by far the largest importer of LNG, with about 42 

percent of total world LNG imports.1 Its major suppliers included 

Indonesia, Malaysia, Australia, Qatar, Brunei, and the United Arab 

Emirates. South Korea, in second place, accounted for about 16 percent of

total world LNG imports, from some of the same suppliers and Oman, 

while Spain, ranked third, imported about 11 percent of the total, mainly 

from Algeria, Nigeria, Qatar, and Egypt. The United States ranked fourth,

with about 9 percent of the total, mostly imported from Trinidad and 

Tobago. While China is not yet an important consumer in the LNG market, 

it is taking steps to significantly increase its LNG profile. With its natural 

gas use increasing rapidly, and uncertainties surrounding the potential of

piped Russian natural gas, China is increasingly considering LNG. Its first 

LNG import terminal received its first shipment in May 2006, and over a 

dozen new terminal projects are either under way or being considered, 

according to EIA. 

 1

 The EIA data on LNG imports do not provide a number for total LNG imports but rather

provide it as apparent world exports of LNG, which the data show totaled 6,828 billion 

cubic feet in 2005. Japan imported 2,858 billion cubic feet, South Korea imported 1,075 

billion cubic feet, Spain imported 769 billion cubic feet, and the United States imported 631 

billion cubic feet.

Page 51 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department Appendix IV of Energy : Comments from the 

Department of Energy 

Note: GAO comments 

supplementing those in 

the report text appear at 

the end of this appendix. 

See comment 1. 

See comment 2. 

Page 52 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 3. 

See comment 2. 

See comment 2. 

Page 53 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 3. 

See comment 4. 

Page 54 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

Page 55 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

Page 56 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

Page 57 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 2. 

Page 58 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 3. 

See comment 4. 

Page 59 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

Page 60 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 1. 

Page 61 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

Page 62 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

See comment 1. 

Page 63 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

The following are GAO’s comments on DOE’s letter dated December 12, 

2006. 

DOE’s cover letter and comments 2, 4 to 6, 40, 41, 47, and 64 generally

addressed our key findings and recommendations. We considered the 

technical comments provided in comments 1, 3, 7 to 39, 42 to 46, and 48 to 

63 and incorporated them where appropriate. 

GAO Comments 

1. GAO does not assert that more data and more timely data will resolve 

energy market and security issues. Rather, our findings highlight the 

increased importance of reliable energy market information for 

mitigating market instability and facilitating investment and, therefore, 

we recommend that DOE give greater priority to improving energy 

information efforts within the international forums. We agree that 

achieving improved international energy statistics is not something the 

United States can do alone. However, we specifically recommend that 

DOE address two relevant areas in which we saw opportunities for 

U.S. improvement, by examining how EIA expertise can be better 

leveraged and by examining how U.S. data submissions to IEA can be

made more timely. Improving energy statistics is one important way in 

which the international forums can enhance the impact of 

international cooperation. 

2. We have clarified and modified language in the report to reflect EIA’s 

support for international data exchange, particularly through efforts 

such as the Joint Oil Data Initiative (JODI) and the APEC Expert 

Group on Energy Data and Analysis. However, EIA expertise has not 

been consistently leveraged for efforts to improve the quality of 

international data through, for example, assisting other countries in 

data collection and modeling or training workshops. Consistent with 

DOE’s comment emphasizing the role of funding constraints in EIA’s 

ability to assist with such efforts, we acknowledged that EIA’s 

participation has been dependent on staff availability. Further, while 

we acknowledge in our report that international cooperation is a small 

part of EIA’s overall mission, we maintain that DOE should examine 

how EIA expertise can contribute to international forum data efforts. 

3. GAO’s recommendation states that DOE should examine how U.S. data 

submissions to the IEA can be made more timely. In our report, we 

acknowledge that the current EIA survey schedule does not 

correspond with IEA’s current scheduled due dates. Nonetheless, we 

maintain that DOE should examine whether there are options for 

addressing the timeliness of U.S. data submissions to the IEA. One 

Page 64 GAO-07-170 International Energy Cooperation
Appendix IV: Comments from the Department 

of Energy 

consideration could include the suggestion provided in DOE’s 

comments to this report that the IEA use EIA miniquestionnaires and 

monthly submissions to generate preliminary U.S. data. 

4. In our report, we recognize that other IEA member countries also do 

not submit their data within the requested IEA time frames. We have

modified language regarding U.S. data submissions to reflect 

additional information DOE has provided. 

Page 65 GAO-07-170 International Energy Cooperation
Appendix V: Comments from the Department Appendix V of Commerce : Comments from the Department 

of Commerce 

Page 66 GAO-07-170 International Energy Cooperation
Appendix VI: Comments from the Department Appendix VI: Comments from the of State 

Department of State 

Page 67 GAO-07-170 International Energy Cooperation
Appendix VI: Comments from the Department 

of State 

Page 68 GAO-07-170 International Energy Cooperation
Appendix VI: Comments from the Department 

of State 

Page 69 GAO-07-170 International Energy Cooperation
Appendix VII: 

A

GAO Contact and Staff 

cknowledgments 

Page 70 GAO-07-170

Appendix VII: GAO Contact and Staff 

Acknowledgments 

Loren Yager, (202) 512-4347, yagerl@gao.gov

In addition to the individual named above, Virginia Hughes, Assistant 

Director; Leyla Kazaz; Kendall Schaefer; Hugh Paquette; and Michelle Munn 

made key contributions to this report. Other contributors include Godwin 

Agbara, Karen Deans, Mark Dowling, Amanda Miller, and Anne Stevens. 

International Energy Cooperation

GAO Contact 

Staff 

Acknowledgments 

(320397) 
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