Slippery matters

The global energy agenda should dominate the 2006 G-8 summit in St Petersburg

Vladimir Milov Moscow

Global energy security will top the agenda of the Group of Eight's (G-8) next summit, to be held in St Petersburg, Russia in 2006. This is a major international problem and a subject that is overdue to appear on the G-8 agenda. Power engineering is one of the few advantageous areas for Russia — it possesses an increasing energy potential available to its partners for discussion.

Experts from the International Atomic Energy Agency define "energy security" as a concept aimed to protect customers against any interruptions in their energy supplies due to emergencies, terrorism, underinvestment in infrastructure, or poor organisation of markets. Developed countries have learnt to protect themselves against emergencies with the help of strategic oil reserves of their own. It is probable that the energy security debate will soon focus on the organisation of markets and on a wide range of issues pertaining to the access to resources.

It would be an illusion to think that discussions within the G-8 framework are capable of bringing humanity any closer to the solution of its energy problems. The G-8 is not a monolithic body, and its status is rather vague. At the same time, it is important not to underestimate the importance of discussions between world leaders concerning global problems — especially concerning those fields where Russia is evidently competitive and has vital interests.

In general, it is untypical of the G-8 to undertake a systemic approach to solving the specific problems facing humanity. Within the framework of this forum, contacts between the leaders per se are often more important than results. Nevertheless, starting from the 2000 summit in Okinawa, energy issues have been invariably mentioned in the final documents of G-8 summits (although in brief and mainly in the context of the development of renewable energy sources and efforts to combat global climate change). Over the last eight years, the G-8 energy ministers have held two special meetings where the focus was on global energy security. At one such meeting, held on May 3-4, 2002 in Detroit, the ministers formulated the basic principles of international interaction in ensuring energy security. The last few years have been marked by stepped-up bilateral "energy dialogues," in which Russia is taking an active part. The discussions brought out several problems of top priority.

First, it is obvious that within the next few years the oil issue will continue to dominate the global energy dialogue. Competition between different energy sources (natural gas, coal, nuclear energy, and renewable and alternative sources) is possible only in stationary power engineering (most importantly, in electric power engineering), where, incidentally, oil consumption has decreased to a record low in recent decades. However, humanity's "mobility" now directly depends primarily on oil: in the transport sector of the world economy, which is vital for global economic growth and globalisation itself, there are no alternatives to oil as a fuel. Moreover, oil is the most "globalised" energy commodity in the world: more than 55 per cent of the world's oil output sells via transborder trading operations (as compared to 33 per cent of the world's natural gas and less than 20 per cent of the world's coal).

Second, deepening globalisation, together with a move on the part of many national economies towards greater openness, assigns special importance to the stability of global energy markets.