Minister,

Distinguished Guests,

Ladies and Gentlemen,

Allow me to extend a special warm welcome to our guests from China. I am indeed honoured and pleased to welcome Vice-Minister Xu to Brussels, two years after my successful visit to China.

On that occasion, we made a significant step forward in strengthening energy relations between the European Union and the People's Republic of China.

We have in this room more than one hundred high-level representatives from the Chinese energy scene.

We also have more than 200 representatives of the European energy industry and administration.

This is the Third Conference on European Union-China Energy Co-operation, a joint effort of the European Commission and the Chinese Government.

Your qualified response today is the best evidence that this effort pays back.

And this is logical. Your participation reflects the positive status of current relations between the European Union and the People's Republic of China. It also underlines that energy is a key factor in the impressive growth of the Chinese economy.

There is no growth without energy. Increasing energy demand requires long-term investments.

This conference represents an opportunity for consolidating existing links and establishing new ones. An opportunity for providing an update on most recent developments, including commercial, institutional and regulatory aspects.

Ladies and Gentlemen,

China has undergone dramatic changes over the last 20 years. It has become a major political player and economic power on the world stage. Its economy has increased 20-fold in size, and it has followed a steady trend towards liberalisation.

China has also become the second largest energy consumer and the third largest energy producer in the world.

The reform of the Chinese administration and State-run industry, initiated one year ago, together with the reform of the banking sector, will have a considerable impact also on the energy sector.

Remarkable changes are taking place in Europe as well.

We have a single market for more than 370 million consumers, that ensures the free movement of people, goods, services and capital. We have become the world's major trading power, with around 20% of global exports and imports.

Eleven European Union countries participate in the EURO, the new single currency that already accounts for about 20% of the world's GDP.

Cyprus and several countries of Central and Eastern Europe are negotiating terms and conditions for their eventual membership of the European Union, whereas the 15 countries of the European Union are creating a greater degree of political integration.

China has become our third most important non-European trading partner, and we have become the third largest trading partner for China.

In March last year the European Commission adopted a policy document on "Building a Comprehensive Partnership with China". Our main objective is the rapid and full integration of China into the international community, both politically and economically. We remain enthusiastic advocates of China's accession to the World Trade Organisation. This would be in the interest of the world economy.

And energy is indeed the bulk of the world economy.

The energy market is increasingly becoming a world market. Energy issues will have to be increasingly addressed at global level. For example, the geopolitics of energy in the Middle East, the Russian Federation and Central Asia are today equally relevant to both the European Union and China.

Within the European Union, we have registered substantial progress regarding liberalisation of the electricity and gas markets; network interconnections; common standards for energy efficiency; clean coal technologies; new and renewable sources of energy; research and technological development. And I just mention but a few significant areas.

And we shall do more, taking into account the interests of our industry and the needs of our citizens at the same time.

In the year when the People's Republic of China celebrates its 50th Anniversary, its energy sector is facing considerable challenges:

how to sustain its economic growth whilst reducing dependence on imports;

how to better balance its energy mix, including promotion of natural gas and renewable energies;

how to deal with the nuclear option;

how to position itself in the international market;

how to improve energy efficiency in the industrial, residential and transportation sectors;

how to reduce environmental pollution and burn cleaner coal;

how to make its energy sector more attractive to foreign investors, particularly as far as oil exploration, exploitation and refining are concerned, just to refer to some significant aspects.

There is no easy answer to these questions. Public bodies and industry must join their respective efforts with a view to achieving a common goal.

The European Commission stands ready to play an active role in promoting international energy co-operation and contacts at the appropriate level, between industry, the financial sector and decision-makers, in order to make substantial progress on matters of mutual interest.

This is one of the aspects that Vice-Minister Xu and I underline in the Joint Declaration that we shall sign just after this inaugural session.

Vice-Minister Xu, Ladies and Gentlemen,

Increasing the level of the dialogue and reinforcing mutual understanding; contributing jointly to the harmonious development of energy policy world-wide; creating the conditions for an expanded presence of European companies in China, in the interest of both China and the European Union

These are the fundamental elements for a new dimension in our energy relations at the dawn of the 21st Century.

I wish the conference every success.