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G8 grapple with world energy supply woes
Expensive oil and gas take centre stage when finance ministers from the world's wealthiest nations meet for talks in Russia.
Expensive oil and gas take centre stage when finance ministers from the world's wealthiest nations meet on Saturday for talks in Russia, whose vast resources are regarded as part of the problem as well as the solution.
Finance ministers of the Group of Eight countries flew into icy Moscow on Friday for a banquet offered by Russian President Vladimir Putin to mark his country's first presidency of the G8, a group that creates the bulk of global GDP.
The serious work starts with discussions focused on rising demand for energy and difficulties in securing reliable supplies of oil and gas from regions often prone to instability.
Oil prices, twice as high as two years ago, are not expected to decline in the short term and the standoff with oil-rich Iran serves a reminder of how vulnerable supply can be, as did a row between Russia and Ukraine that disrupted gas exports to Europe earlier this year.
Russia has declared energy security a priority of its term as G8 president, but is being asked to prove it is serious after the payment row with Ukraine that shut the taps on gas exports to Ukraine and Western Europe at the start of 2006.
German Finance Minister Peer Steinbrueck said on arrival in Moscow that he saw "significant progress" in one of the areas that most interest Russia's G8 partners -- Russia's willingness to liberalise a tightly controlled energy sector.
His country already has a small stake in Russia's Gazprom, a monopoly which is also the world's largest gas producer and supplies a quarter of Europe's gas, via Ukraine.
The problem goes further in a time when oil too is a worry, with prices of more than $60 a barrel.
"Given the high level of oil prices we need to think about how to secure a stable energy supply," Japanese Finance Minister Sadakazu Tanigaki said.
No quick fix
Officials said they expected little in the way of concrete developments to emerge from the Moscow meeting but said it was clear France and other European members of the G8 wanted Moscow to allow more foreign investment and loosen the monopoly of the Russian energy company, Gazprom.
That would involve Russia ratifying an international charter on the matter, something many people say will not happen soon.
Russia's number two oil official Sergei Oganesyan was quick to dismiss the idea of an end to Gazprom's monopoly before the G8 ministers even arrived in the Russian capital.
"There is and there will continue to be a monopoly," he told Reuters.
Gazprom does not allow others to export gas to Europe or to even produce more than it is prepared to accept in trunk pipelines, all of which are under its control.
This poses a problem for other G8 countries -- the United States, Japan, Canada, Germany, France, Britain and Italy.
Investment analysts believe Russia has little incentive to heed calls for liberalisation of its energy sector however.
For Putin, the presidency of the G8 is a celebration of his country's transformation after the collapse of the Soviet Union, but the other finance ministers still do not consider Russia an equal, mindful that it went to the brink of financial ruin and debt default in 1998 even if it is rich in oil and gas.
Saturday's talks mark the debut of a year-long presidency and will be attended also by the finance ministers from rising stars of the world economy -- China, India, Brazil and South Africa. China's economy is bigger then several G8 ones.
