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International Energy Security, Leaders Level

On June 12, 2006, the New York Times reported that a draft declaration being negotiated for adoption at the summit aims to give Russia freedom to invest in US and European energy utilities, pipelines, natural gas facilities and other energy infrastructure.[1] The draft paper links broader Russian access with an endorsement of market principles and the importance of foreign investment in the energy industry.[2] Russian sherpa Igor Shuvalov said that Russia's is determined to get the G8 to endorse the notion that energy security means access to investment in the West and the means to delivery oil and gas.[3]

On June 6, 2006, British prime minister Tony Blair stated that he will raise the issue of climate change with his counterparts at the G8 Summit.[4]

On June 6, 2006, the Brazilian Finance Ministry announced that Brazil will present its biofuel technology, which allows automobiles to run on gasoline or ethanol, at the G8 Summit.[5]

On May 16, 2006, Igor Shuvalov stated that an energy document that may be adopted by the leaders at the G8 summit, will state that energy security "should be based on market mechanisms that will open a lengthy cycle of investments, and prevent a negative impact by possible political decisions."[6] Shuvalov also said that he hopes the summit will yield a "new long-term investment cycle" in energy.[7]

On April 12, 2006, Russian sherpa Igor Shuvalov was hosted by Russian Ambassador Georgiy Mamedov in Ottawa.[8] The Embassy's press release stated that energy supply "is crucial for sustainable economic development and political stability in the world." It went on to say that leaders must examine the issue of energy security in the context of global climate change and must bear in mind that the world's poorest countries cannot access affordable energy.[9]

On March 20, 2006, Russian Foreign Minister, Sergey Lavrov stated that measures to stabilize the hydrocarbon and raw materials markets and to curb threats to international power safety will be considered at the Summit.[10] He also stated that the search for alternative sources and minimizing the impact on the environment will be considered.

On March 15, 2006, Kyodo News announced that the G8 leaders will endorse Moscow's initiative to establish centres for international nuclear fuel cycle services at the summit.[11] The G8 leaders, according to a leaked draft copy of the "Global Energy Security" joint statement and action plan, will also call for increasing the use of nuclear energy, boosting investment in oil and gas supplies, and promoting global cooperation to deal with terrorism aimed at energy facilities.[12] The "Global Energy Security" paper is dated March 6 and is to be released July 16 by the G8 leaders. It focuses on fossil fuels supplies and nuclear energy.[13]

On March 1, 2006, President Putin's article "The Upcoming G8 Summit in St. Petersburg: Challenges, Opportunities, and Responsibility" was published.[14] On energy security, he stated that: "The establishment of a reliable and comprehensive system of energy security is clearly one of the strategic goals for the G8 and the world community as a whole. Today, global energy is an important and true engine of social and economic progress. This is why it directly affects the well-being of billions of people around the globe.

During the Russian Presidency, not only will we seek to develop fundamental approaches to meeting current challenges in this field but also outline our coordinated policy for the long term.

Today, the lack of stability in the hydrocarbon markets poses a real threat to global energy supply. In particular, the gap between supply and demand continues to widen. The apparent increase in energy consumption in Asian countries is caused not only by market fluctuations but also by a host of other factors related to policy and security. In order to stabilize the situation in this field, coordinated activities of the entire world community are needed.

The new policy of the leading world countries should be based on the understanding that the globalization of the energy sector makes energy security indivisible. Our common future in the area of energy means common responsibilities, risks and benefits.

In our view, it is especially important to develop a strategy for achieving global energy security. It should be based on a long-term, reliable and environmentally sustainable energy supply at prices affordable to both the exporting countries and the consumers. In addition to reconciling the interests of stakeholders in the global energy interaction, we will have to identify practical measures aimed at ensuring sustainable access of the world economy to traditional sources of energy, as well as promoting energy-saving programmes and developing alternative energy sources.

A balanced and fair energy supply is undoubtedly a pillar of global security at present and in the years to come. We ought to pass on to the future generations a world energy architecture that would help avoid conflicts and counterproductive competition for energy security. This is why it is essential to find common approaches to creating a solid and long-term energy base for our civilization.

In this connection, Russia calls on the G8 countries and the international community to focus their efforts on developing innovative technologies. This could serve as an initial step in creating a technological basis for energy supply of mankind in the future, when the energy potential in its present form is exhausted.

Global energy security will also benefit from an integrated approach to enhancing energy efficiency of the social and economic development. The G8 made important progress towards elaborating it last year in Gleneagles, including, in particular, the adoption of the Plan of Action aimed at promoting innovation, energy saving and environmental protection. We find it crucially important to engage non-G8 countries, especially fast-growing and industrializing economies, in participating in the G8 initiatives and, particularly, in implementing the document adopted at Gleneagles.

The way most people see it, energy security has mainly to do with the interests of industrially developed countries. It should be kept in mind, however, that almost two billion people in today's world do not enjoy modern-day energy services, while many of them lack access to even electricity. Their access to many benefits and advances of civilization has been virtually blocked.

Needless to say, energy alone would not solve the poverty problem. At the same time, lack of energy resources throughout different regions significantly hinders economic growth while their unsustainable use may result in an ecological disaster on a global rather than local scale.

Lately, experts have been actively discussing ways of increasing energy use in developing countries through a more intensive development of non-conventional energy sources. And this is where assistance rendered by the G8 in developing and introducing alternative power facilities becomes ever so important.

Generally speaking, all of us should recognize and admit that "energy egoism" in a modern and highly interdependent world is a road to nowhere. Therefore Russia's attitude towards energy security remains clear and unchanged. It is our strong belief that energy redistribution guided wholly by the priorities of a small group of most developed countries does not serve the goals and purposes of global development. We will strive to create an energy security system sensitive to the interests of the whole international community. Basically all it takes is for the mankind to create a balanced potential in order to provide every State with sustainable energy supply, and international cooperation opens all avenues for that."[15]

On March 1, 2006, in a press conference, President Putin said that energy security is the number one item on the agenda.[16] He stated that: "we have agreed with our partners on these priorities that we proposed. All of our colleagues agree that these are very important matters and that paramount among them is the question of energy security. At any rate, energy security is one of the biggest problems facing us today and it will be a big issue for the future too given that without energy, without resolving energy issues, no development at all is possible. But I want to make it clear that by energy security we mean not just the energy needs of the most industrially developed countries but the needs of every member of the international community. We are well aware that billions of people - around two billion by our estimates - have problems with access to the benefits of modern civilisation precisely because their countries have insufficient energy. And we know for a fact that millions of people do not even have electricity. In talking about energy security then, we are talking about the needs of the entire world and not just of the industrially developed countries. Of course, we also chose to address this issue because we believe that Russia can make a noticeable and significant contribution to its resolution. I do not think there is anyone in the world today who would doubt that Russia can make a contribution to resolving this global challenge that we face."[17]

On March 1, 2006, Putin stated on Russia TV that: "When we speak of energy security we mean not only the needs of the most developed industrial countries of the world but also of all other members of the international community, because we are well aware of the fact that millions and even billions of people - about 2bn people, according to our estimates - experience problems as they have no access to modern conveniences of civilization precisely because there is not enough energy in their countries. And millions of people, for sure, do not even have access to electricity."[18]

On February 28, 2006, Russia's nuclear oversight service chief, Konstantin Pulikovsky, told journalists that Russia will propose establishing international centres to license nuclear research.[19] Pulikovsky stated that: "Russia would benefit from the establishment of such centersÉ This proposal will be submitted to the G8 leaders when they gather in Russia." He went on to state that "licensing will be particularly important if one country participates in building an NPP on the territory of another countryÉ This will help secure the consent of all parties taking part in the construction process."[20]

On February 24, Russian daily Moskovskiye Novosty published an article by Russian Foreign Minister Sergei Lavrov.[21] Lavrov stated that energy security will be based on a responsible and well balanced approach to the problems in the Middle East, including socio-economic and political modernization.[22] He went on to state: "In general, Russia has to make its choice between stability in the world energy sector and the policy of 'controlled destabilization' and 'modernization,' regardless of what it is related to."[23] He said that the move within the Commonwealth of Independent States to market prices on natural gas ended the "old and nostalgic" and has led to "new realistic policy on the post-Soviet space based on mutual benefit and the actual sovereignty of CIS member states."[24]

On February 2, 2006, deputy head of the Russian Federal Agency for Nuclear Power, Sergei Antipov, announced that Russia is preparing nuclear energy proposals for the St. Petersburg summit on fast neutron reactors and international uranium enrichment centers.[25] Antipov stated that the agency is working on targeted programs for nuclear energy development and nuclear and radioactive security, and that "the main issues are the international fuel cycle and fast neutron reactors."[26]

On February 1, 2006, Yevgeny Velikov, member of the Russian Academy of Sciences and president of the Kurchatov Institute research center, stated that they expect an international agreement on the construction of an experimental fusion reactor ITER will be signed at the St. Petersburg Summit.[27]

On January 25, 2006, President Putin announced at a meeting of the Eurasian Economic Community's intergovernmental council in St. Petersburg that Russia is ready to establish an international center of uranium enrichment, supervised by the International Atomic Energy Agency.[28] Putin announced that he will put forth this proposal at the G8 summit in July.[29]

On January 13, Russian Foreign Minister Konuzin stated that Russia agrees with the G8 leaders that nuclear energy must be developed further.[30] He stated that nuclear and hydroelectric energy are the only alternatives to fossil fuel.[31]

On January 11, 2006, Russian Finance Minister Alexei Kudrin told reporters that, "During its presidency in the G8 [in 2006], Russia plans to focus on counteraction to infectious diseases, energy security and energy supplies to G8 nations, and education." He also stated that the Russian agenda would include discussions of further development and higher transparency of energy markets, more investment in the energy sector, and alternative energy sources. He stated that, "Russia will increase oil and gas production and exports to international markets and develop alternative energy sources, including nuclear power."[32] Kudrin noted specifically that: "The issues for Russia's presidency of the G8 are connected with the drafting of the principles and an action plan to ensure the stable provision of energy supplies for all countries, and in addition there will be discussion of developing and increasing the transparency of energy markets and also attracting new investment into energy and developing alternative energy sources."[33] Ensuring energy supplies is central to the Russian G8 agenda.[34]

On January 4, 2006, the Financial Times reported that Russia aims to increase investment in energy infrastructure, particularly transporting liquefied natural gas and completing pipelines.[35]

In the Address by Russian President Vladimir Putin to visitors to the official site of Russia's G8 Presidency (which began on January 1, 2006), Putin stated: "This year, we plan to urge our partners to redouble efforts to ensure global energy securityÉ I am convinced that our efforts towards attaining this goal should be comprehensive and must stimulate stabilization of the global energy markets, development of innovation technologies, use of renewable energy sources and protection of the environment. We believe that today, we must think very seriously about ways to bridge the gap between energy-sufficient and energy-lacking countriesÉ Issues of global energy security should be considered in the context of two other crucial problems: global climate change and the lack of access of a considerable number of the world's poorest sections to pure and affordable energy."[36] The website suggests that "Ensuring energy security calls for the following joint actions by the international community: reliable and effective provision of traditional hydrocarbon energy resources to the global economy; energy diversification through the use of new energy sources and technologies; and more efficient use of energy resources."[37]

The Russian Presidency website outlines the Russian position on energy security: "International energy security is of special significance to Russia, which has one of the world's biggest fuel and energy potentials."[38] The specifics of Russia's energy capacities are noted, and then the site goes on to state that: "As a global energy and resource power, Russia will use its G8 Presidency in 2006 to promote international action on acute problems of energy security with due regard for the interests and possibilities of Russia and its role of a reliable and stable energy supplier.

In this period, Russia will work to reinforce G8 approaches to energy security and at the same time outline its view of the problem and national priorities." As both a large consumer and producer of energy "Russia can act as the link between hydrocarbons suppliers and consumers, taking into account the opinions of all concerned parties and promoting the search for a balance of interests of all players on the global energy market."[39]

"During its Presidency, Russia will offer its partners to draft a coordinated strategy for reliable and prompt supply of the global economy and nations with all kinds of energy at prices based on the main economic principles, with the least possible damage to the environment."[40]

"This strategy will stipulate joint measures to ensure the stability of global energy markets, increase investment into the main links of global energy, develop alternative sources of energy, accelerate the introduction of energy saving and efficient technologies, and ensure access to modern energy services for everyone."[41]

The Russian role as president of the G8 will be to "put forth a package of measures and an action plan to overcome economic and technological barriers to raising the efficiency of traditional and developing new energy technologies. As the holder of a considerable share of the world's energy resources and a major energy producer and exporter with a high research and technological potential, Russia is ready to participate in the creation of a global energy infrastructure to ensure effective production, transfer and use of clean energy."[42]

Following the 2005 Gleneagles Summit, Putin announced: "At the same time, however, Russia proposes making world energy policy the key issue for the next summit. Even during our discussions on global finances, world trade and global economic development yesterday, more than two-thirds of our attention was spent on energy issues. It is only natural that Russia, the world leader on the energy market, should focus precisely on energy policy. If you put together Russia's energy potential in all areas, oil, gas, and nuclear, our country is unquestionably the world leader. We are most certainly ready to discuss all these issues and want to make this the main subject for our summit... We will increase our supply of energy resources to the world market and we will also continue to work on developing nuclear energy. Regarding nuclear energy, there are also many non-proliferation issues that we need to discuss, as this is a very sensitive subject."[43]

Energy, Ministerial Preparatory Process

On June 12, 2006, UK Chancellor Gordon Brown said that the G8 will push for increased investment in energy and greater energy market transparency to counteract the surge in oil and gas prices.[44]

Despite endorsing "the importance of the principles of the Energy Charter, of diversification of energy markets and supply sources" in the Finance Ministers' Communiqué, Russian Finance Minister Alexei Kudrin stated on June 11, 2006 that "Russia shared and continues to share the principles of the Energy Charter, but some of the principles it contains do not suit us."[45] Specifically, Kudrin noted that the treaty does not take into account the impact that EU enlargement has on energy transit and that it fails to address the issue of nuclear energy.[46] French Finance Minister Thierry Breton stated that the recognized principles must be applied and that it is unfortunate that an agreement on ratification of the Energy Charter could not be reached with the Russians.[47]

On June 6, 2006, Russian Finance Minister Alexei Kudrin said that the Finance Ministers meeting from June 9-10 will discuss access to energy infrastructure in the world's poorest countries, infectious disease, terrorist financing, energy security, public finance management and financial literacy.[48] Kudrin stated that the Finance Ministers will not discuss global exchange rates, given that the Central Bank Governors will be absent from the meeting.[49] Kudrin announced that representatives from China, India, Brazil, Australia, South Korea and Nigeria will participate in the discussions on public finance management and donorship.[50] The Minister of Finance from Austria, which holds the chair of the European Union, as well as International Monetary Fund and World Bank representatives, will also attend.[51] ITAR-TASS further reports that a representative from the Organisation of Economic Cooperation and Development will attend.[52]

On June 6, 2006, Jiji Press stated that the Finance Ministers are expected to discuss at their June 9-10 meeting the importance of communication between oil-producing and consuming countries, investment in oil exploration, production, transportation and refining, and energy efficiency and diversification.[53] They are set to discuss energy infrastructure in developing countries.[54] They will discuss infectious diseases and vaccine development.[55] They will also discuss financial education.[56] Global imbalances will also be discussed, on which the Finance Ministers are expected to agree to redress imbalances through structural reform of G8 countries rather than exchange rate adjustment mechanisms.

On June 6, 2006, Japanese Finance Minister Sadakazu Tanigaki said that the Finance Ministers will mainly discuss issues surrounding the high energy prices at their June 9-10 meeting.[57] Tanigaki stated that Japan will call for improving the investment climate in countries that produce crude oil and other energy sources, and increasing energy efficiency in energy-consuming countries.[58]

On June 6, 2006, Japanese Finance Minister Sadakazu Tanigaki stated that the Finance Ministers will discuss rising energy prices and their effects on the global economy at their June 9-10 meeting.[59] Tanigaki stated that "Energy issues have been discussed at past international meetings, such as the Group of Seven finance leaders' meeting, and there are many things that oil producers, consumers and financial markets can do to improve."[60]

On March 23, Alexander Khamaza, chief of the international cooperation department of the Rostekhnadzor (Federal Service for Environmental, Techological, and Nuclear Supervision) stated that the Energy Ministers would produce joint documents on "licensing, supervisory monitoring actions, as well as sanctions" and that preventive measures against offenders will be referred to the sherpas of G8 countries for integration into the annual summit.[61] The G8 Energy Ministers met at the President's Hotel in Moscow from March 13-14, 2006.

Rostekhnadzor chief, Konstantin Pulikovsky, announced in February at an international conference of the International Atomic Energy Agency that proposals were being prepared with a view to establishing in Russia an international center for the storage and processing of nuclear waste.[62]

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