G8 seeks stable energy supply

Finance ministers of world's wealthiest nations sounded the alarm over the cost of energy on Saturday and urged greater international co-operation to ensure stable supplies.

G8 seeks stable energy supply

Ministers from the Group of Eight industrialised countries said in a communiqué that global economic expansion was strong but at risk because of high and volatile energy prices.

"We need to develop a civilised strategy which will reliably secure the world with energy at reasonable prices and with minimal damage to the environment," Russian President Vladimir Putin told the ministers.

A communiqué from the ministers said more work was needed to co-ordinate energy policy and promote price stability through a properly functioning market.

The meeting in icy Moscow marked Russia's first presidency of the G8 club -- which also includes the United States, Japan, Canada, Germany, France, Britain and Italy -- and Putin has made energy security a central theme for 2006.

For some of Putin's G8 partners, Russia is part of the problem as well as the solution.

RELYING ON RUSSIA

Russia is one of the world's biggest oil and gas suppliers but a recent row with Ukraine, in which it closed the gas taps, has made other G8 countries uneasy because the spat disrupted supplies in countries such as Hungary, Austria and Italy too.

International Monetary Fund Managing Director Rodrigo Rato, present at the talks, said supply problems increasingly seemed to be part of the problem, and not just surging demand from countries such as China.

Oil, at more than $60 a barrel, is roughly twice as dear as it was two years ago, though still lower than the records it hit after the Arab oil embargo, Iranian revolution and Iran-Iraq war in the mid-1970s and early 1980s.

The diplomatically worded G8 communiqué made no reference to the Russian gas supply spat but officials said they were keen to see the Kremlin allow more foreign investment in its energy sector and loosen the grip of the monopoly supplier Gazprom.

The standoff with oil-rich Iran over uranium enrichment has also served a reminder of how vulnerable supplies can be.

Finance Minister Alexei Kudrin appeared to cede some ground when he told a post-G8 news conference Russia might eventually end state-controlled Gazprom's gas export monopoly.

"In the future, access to the export pipeline will become equal. I am not ready to say when that will happen," he said.

The finance ministers kicked off their talks over breakfast with their opposite numbers from some of the rising stars of the world economy, China, India, Brazil and South Africa.

Russia, awash with oil cash, also told the ministers that it was going to pay back $11.9 billion (6.8 billion pounds) in Soviet-era debts it owes to the Paris Club of sovereign lenders.

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.

The Moscow meeting also allowed time for some discussion of Russian entry into the World Trade Organisation.

U.S. Treasury Secretary John Snow said differences on the issue were being narrowed. Openness of financial markets is one of the sticking points.

Kudrin said the meeting generally had been tricky at times.

"Of course such talks between ministers are quite tense -- it's a struggle to convince each other your opinion is right ... Every finance minister, defending the interests of his country, will stand by his opinion," he said.

Currency relations are often discussed at such meetings but there was no formal discussion this time because the other G8 countries did not want to do so in the absence of central bank governors.

But Canada's new finance minister, Jim Flaherty, said there was some debate over Asian currencies.

China's currency regime is widely judged to hold the yuan's value too low at the expense of other trading nations but it has said it will only reform in its own time.

Source: Reuters

Last Mod: 20 Eylül 2018, 18:16
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