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Russia pushes for global energy security

Vladimir Radyuhin

RUSSIA HAS scored its first victory as the 2006 G8 chairman, winning support from the other members of the group for its proposal to place energy security on top of the G8 agenda.

Meeting in Moscow over the weekend, the G8 Finance Ministers "welcomed the decision to focus on energy security for the G8 summit in St Petersburg," a statement issued after the two-day meeting said.

Underlining the urgency of the Russian initiative the G8 Finance Ministers warned that "high and volatile oil prices" were a threat to global growth.

Acceptance of the energy agenda for G8 advances President Vladimir Putin's goal of asserting Russia as a global energy leader. Last year Russia emerged as the world's second largest oil exporter and strengthened its position as No.1 natural gas supplier.

Taking advantage of its unique position in G8 as the only major energy exporter, Russia took an innovative approach to the problem of bringing stability and security to global energy markets. So far G8 has concentrated on technology-centred solutions, promoting energy-efficient and ecology-friendly technologies, as well as renewable and alternative energy sources. The group also heavily relies on the play of market forces to regulate the supply-demand balance, as was again evident at the Moscow meeting.

"Market mechanisms are vital to the effective functioning of the global energy system," the Finance Ministers' statement said.

Russia, however, suggested taking a broader look at the energy problems. It proposed launching a comprehensive dialogue between major energy producers and consumers to ensure continuous and adequate supply of energy resources at acceptable prices.

The G8 Finance Ministers backed this proposal as well. "In order to improve the smooth functioning and stability of markets, we agreed to take forward work on enhancing the global energy policy dialogue between oil producing and consuming countries and the private sector," they said in the Moscow statement.

This approach has won wholehearted support from India. Finance Minister P. Chidambaram, invited to attend the G8 meeting in Moscow along with his colleagues from China, Brazil, and South Africa, described as "very sensible" the Russian idea of getting energy producers and consumers talk to each other. "For energy security and stability producers need long-term consumers," Mr. Chidambaram said.

Heated discussions

Even as the G8 Finance Ministers reached broad agreement on the energy agenda for the G8 summit in St. Petersburg next summer, Russia's Finance Minister Alexei Kudrin conceded that discussions had been "heated." More heated debates lie ahead as Russia and its partners in G8 have different views on ways of ensuring energy security.

The West is trying to use Russia's chairmanship of G8 to press it to ratify the Energy Charter Treaty, which Russia signed during Boris Yeltsin's chaotic presidency. This would commit Russia to giving free access for investors to its lucrative energy resources, ending the state-owned Gazprom company's monopoly on natural gas production and export, reducing high tariffs on oil and gas exports, and hiking domestic gas prices to international levels.

Russia says it is ready to cooperate but on its own terms. Moscow is tightening state control over the strategic energy sector as a matter of national security. It is willing to make investment easier only for projects with foreign minority stakes. Moscow has refused to break up Gazprom or cede state hold on pipeline networks and agreed to raise domestic energy prices at its own pace only.

By inviting non-G8 energy consuming nations to join the energy dialogue Russia hopes to rake up pressure on the United States to act with greater responsibility in the international arena. Receiving the G8 Finance Ministers in the Kremlin, President Putin warned that global energy markets were threatened not only by technological and ecological, but also "serious political risks.'

With oil prices hovering above $60 a barrel and global energy demand racing ahead, President Putin shows that it is Russia, not the West, that holds most of the cards. Russia's case is further strengthened by the position of such leading energy-consuming nations as India and China, which are prepared to work with Russia on its terms.

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