Energy ministers convene for security talks
Energy ministers from the world’s richest countries today called for market-oriented approaches to increasing supplies and said significant investments would be needed in production, transportation and processing of resources.
The ministers from the Group of Eight nations met in Moscow against the background of high oil prices and uncertainty about supplies, which have led nations to start considering alternate means and providers.
They also called for a positive investment environment to encourage development in the sector.
“We recognise that to attract investment it is essential for countries to have open and favourable investment regimes,” they said, “including stable and predictable regulations, clear tax laws, and efficient administration procedures as well as fair and reciprocal access to markets along the energy value chain.”
The ministers said this century “is sure to witness a significant increase of the global consumption of energy, primarily by dynamically developing economies,” according to a statement released by Russia’s Ministry of Industry and Energy.
“Despite the increased presence of alternative sources in the energy mix, the fossil fuels will remain the basis of the world energy industry for at least the first half of the 21st century.”
The ministers also called for enhanced communication and information exchanges between energy producers, transit, and consumer countries.
As the world’s No. 1 gas producer and the biggest oil exporter after Saudi Arabia, Russia was a fitting host – even amid concerns that Western oil companies have about investing in Russia and EU worries about the dependability of state-controlled monopoly Gazprom.
After the G-8 finance ministers warned earlier this year about the effect of “high and volatile” energy prices on the world economy, Russian Energy Minister Viktor Khristenko said today that £10 trillion needed to be invested by 2030 “to create an effective global energy system that is resilient to shocks.”
“A joint effor is necessary to create the conditions for the effective mobilisation of the said gigantic funds and for their optimal use,” he said.
Stable legislation, a clear tax regime and flexible administration are key to realising this goal, Khristenko said.
That list echoes the concerns on Western oil companies. Legislation clarifying the rules for tapping Russia’s vast hydrocarbon reserves is still pending, at a time when the country is under huge pressure to increase its plateauing production by forging partnerships with foreign energy companies to rush new, hard to access reserves to market.
The focus on security of energy supplies was heightened by Russia at the start of the year, just as Russia was assuming the chairmanship of the Group of Eight industrialised nations.
A gas price fight with Ukraine saw Russia cut supplies to its neighbour, a move that temporarily disrupted deliveries across Ukrainian territory into Europe.
“It’s been kind of a wake up call for European nations that have been dependent on Russia for a number of years,” US Energy Secretary Samuel Bodman said yesterday before the meetings.
“I think its also stimulated the thinking about the question of energy security and the impact of problems of any sort ... diversifying the source of energy is very important to managing the economy of a country.”
On Monday, Gazprom deputy chief executive Alexander Medvedev defended the gas monopoly’s position, arguing that the dispute had been blown out of proportion by the media.
He noted that the company’s share price had soared in the weeks around the dispute, which he said was proof that investors did not believe Gazprom was being used as a political tool to punish Ukraine’s Western-leaning government, as some observers had suggested.
