G8 finance ministers fail to douse fires of energy dispute

SAINT PETERSBURG - Russian and EU finance ministers refused to budge in a high-stakes debate on energy during talks here on Saturday, leaving the row to their political bosses at next month’s G8 summit.

By (AFP)

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Published: Sun 11 Jun 2006, 9:58 AM

Last updated: Sat 4 Apr 2015, 3:23 PM

Group of Eight finance ministers meeting in Russia’s second city Saint Petersburg on Saturday all agreed that booming oil prices threaten the current good health of the world economy.

They called on energy producers and consumers to “facilitate investment in the energy sector, improve energy efficiency, including through national initiatives, and promote greater transparency and reliability in energy market data.”

But on the politically sensitive issue of Russian-EU energy relations, the G8 made no ground beyond expressing hope for a future resolution.

The ministers’ joint statement referred to the long-delayed agreement, or charter, between Russia and the European Union under which the two sides would regulate their massive energy trade.

“We recognize the importance of the principles of the energy charter,” the statement said.

The devil, however, lies in the details, not the general principles of the charter, which aims for closer energy integration between Moscow and Brussels -- a mammoth relationship in which Russia supplies a quarter of the natural gas the EU consumes.

Europe is increasingly nervous about over-dependence on Russian gas and oil, as well as being concerned that investment in Russia’s energy fields is insufficient to guarantee needed output in the future.

The European Union in particular wants to see an end to state-run giant Gazprom’s de facto monopoly on gas exports and greater access for European energy companies to Russia’s gas market.

Moscow, which is enjoying the fruits of high energy prices, demands in return greater access to EU markets, including in the gas retail sector -- an idea that only further jangles European nerves.

French Finance Minister Thierry Breton expressed satisfaction after the G8 talks Saturday that the charter had at least come up for discussion.

“The principles are very strong, so the fact that we referred to the charter, that we referred to the principles, allows us a good working basis,” he said.

However, Russian Finance Minister Alexei Kudrin said: “Russia shares the principles of the energy charter, but the way they are formulated in the accord does not suit us.”

He also made clear how much work remains, stressing that just as Europe seeks reassurance about Russian supplies, so Russia wants to be sure of steady European demand.

“There’s no production shock. It’s consumption shock that is linked to lack of predictability of consumption,” he said. “We need more trust.

Russia has suffered a bout of bad press in the energy row, particularly over the crisis in January when Gazprom cut gas supplies to Ukraine over a price dispute, leading to a knock-on shortage in EU markets further west.

But Moscow is now fighting to seize back the high ground. ”Russia has always been a sufficiently reliable supplier of energy and remains so,” Kudrin insisted.

Kudrin also used the G8 meeting to unveil plans for bringing electricity to some of the 1.6 billion people worldwide, mostly in Africa, who live without power.

“We have raised the question... of accessibility of energy infrastructure for populations. This is a new aspect of energy that is not only about basic energy supply but health and education and improvement of living conditions. This is a Russian initiative,” Kudrin said.

The Russia-EU debate will now go on in the lead-up to the G8 summit in Saint Petersburg on July 15-17.

The goal is “an adequate and more or less cooperative level playing field that will help create investments (to enable) energy markets to become stable,” a diplomat at the talks told AFP.

“We are not there yet but I believe it has been useful for both sides to understand each other better,” said the diplomat, who asked not to be named. “This is only part of the cycle leading to the summit.”

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