G8 Energy and financial statements 11 February

The G8 finance ministers prepared a communique' yesterday signalling the intent of outcomes from the St Petersberg July summit.

On energy.

We reviewed the global energy outlook and welcomed the decision to focus on energy security for the G8 summit in St Petersburg. Market mechanisms are vital to the effective functioning of the global energy system. 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. Ongoing efforts, including in existing energy fora such as the IEA and the IEF, are important to help enhance transparency, timeliness and reliability of demand and supply data, facilitate necessary investments in exploration, production, transportation, and refining capacity, as well as improve energy efficiency. This may also facilitate diversification of energy production and consumption, develop alternative sources of energy, and protect the environment.

We call on the World Bank to work with low-income countries to develop country-specific energy strategies to help them achieve the Millennium Development Goals. The initiative launched by a number of donors and IFIs on infrastructure will complement this work. We look forward to the launch at the Spring Meetings of the World Bank led framework to enhance investment in low carbon energy and energy efficiency in developing countries with the full participation of Regional Development Banks. We welcome the creation of the IMF’s Exogenous Shocks Facility (ESF) to provide policy support and address financing requirements of energy-poor developing countries. We welcome financial commitments already made to the ESF and encourage other donors, including oil producing countries, to make contributions. We reiterate our commitment, after the 2005 Gleneagles Summit, to a successful replenishment of the Global Environment Facility.

At their meeting in the Kremlin with the Vladimir Putin, the president said Russia would allocate $43.5 million in 2006-2010 for the IMF's Exogenous Shocks Facility.
Putin also said that Russia was ready to pay the International Development Association up to $587 million extra.
"This money could be used to cover the so-called structural gap."

In addition Russia also indicated prepayment of Paris club debt of 12 B$.

Other interesting developments not part of the communique are

1 The creation of a new natural gas market and exchange similar to the oil market.

2 The creation of a new oil trading market in Russia based on the Urals blend,and increased finished petrochemical commodities.

3 The full tradeability and liquidity of the rouble from 2007 and its availability as a reserve currency.

These 3 factors and the Norway/Russian trading bourse for NG chould remove some viablity of the market limitations on the Oil and energy trading markets.