G8 seeks stable energy supply

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

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.

It 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 also disrupted supplies in countries such as Hungary, Austria and Italy.

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 US$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.

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 final text of the communiqué is available at the link below.

- REUTERS