Rich nations seek stable energy supply - Breaking News - Business - Breaking News

Finance ministers of the world's wealthiest nations complained about high oil prices at talks in Russia on Saturday but said they still believed economic growth would be good again this year.

Ministers from the Group of Eight industrialised countries said in a communique that global growth remained strong but that high and volatile energy prices posed a threat. They also called for more progress in trade liberalisation negotiations.

International Monetary Fund Managing Director Rodrigo Rato, present at the talks, said high energy prices seemed to be the result of supply problems as well as high demand.

The meeting in icy Moscow marked Russia's first turn as G8 president and focused primarily on concern over the cost and reliability of supplies of oil and gas.

As ministers signed off the communique and headed to lunch with President Vladimir Putin at the Kremlin, Finance Minister Alexei Kudrin was quoted by Russian RIA-Novosti news agency as saying that the talks had at times been "stormy".

It was not immediately clear whether Kudrin was referring to tension over energy supply or other issues at the meeting, such as Russian repayment of foreign debts and aid for the world's poorest countries.

ENERGY SUPPLY WOES

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 triggered ill-ease among others in the G8 club - which comprises the United States, Japan, Canada, Germany, Italy, Britain, France as well as Russia.

The diplomatically phrased communique made no reference to that issue but officials said they are keen for Russia itself to allow more foreign investment in its energy sector and to loosen the grip of the monopoly supplier Gazprom.

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.

China's breakneck expansion rate, more than twice the pace of the world in general, has also made it the world's second largest consumer after the United States of oil.

Rising demand has doubled oil prices in the past two years but another major worry is securing reliable supplies of energy from regions often prone to instability.

The standoff with oil-rich Iran serves as a reminder of how vulnerable supplies can be, as did the Russia-Ukraine spat over how much the latter paid for gas.

RUSSIA RESISTS

Russia has declared energy security a priority of its annual G8 presidency, but is being asked to prove it is serious after cutting gas exports to Ukraine and Western Europe at the start of 2006.

Russia's number two oil official Sergei Oganesyan was quick to dismiss the idea of an end to Gazprom's monopoly before the G8 ministers even arrived in the Russian capital. "There is and there will continue to be a monopoly," he told Reuters.

Pressure could mount though, with another meeting scheduled for March among energy ministers.

Gazprom does not allow others to export gas to Europe or to even produce more than it is prepared to accept in trunk pipelines, all of which are under its control.

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.

© 2006 AAP
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