G8 seeks answers to world energy riddle in Moscow

MOSCOW, Mar 16 (Reuters) Ministers from the world's top energy players began talks in Moscow on Thursday with users and producers showing little sign of consensus on energy security problems that will only get more acute in the years ahead.

Moscow, hosting a meeting of G8 energy ministers for the first time, has also invited officials from energy-consuming giants China and India and the oil-producing cartel OPEC in a bid to launch the first ever global energy security dialogue.

Issues such as stability of supply and demand, alternative fuels, renewed interest in atomic energy and the need for global emergency plans to deal with disruptions will be high on the agenda.

''Massive investments will be needed to create an effective system of global energy supply resistant to shocks,'' Russian Energy Minister Viktor Khristenko told the meeting in opening remarks.

''The International Energy Agency estimates that this will require trillion until 2030, most of which must be spent on production, transportation and refining of energy resources.'' Khristenko called on all parties to work towards producing a comprehensive and forward-looking energy action plan that G8 leaders can sign off on at their annual summit in St Petersburg from July 15-17.

But few expect the communique from Thurday's talks or the ministers' meeting with President Vladimir Putin, who recently called on top consumers to shake off ''energy egotism'', to provide firm answers as to how to secure everyone's interests.

REPUTATION REPAIRS Russia will use the meeting to restore its reputation of a reliable supplier after it briefly cut gas supplies to Europe this year due to a pricing dispute with Ukraine.

The move shocked Europe and prompted the European Union to seek a new broad deal with Russia, its top energy supplier, which would loosen state-controlled Gazprom's control over gas exports to Europe.

But Khristenko dashed those hopes this week by saying Russia would not open up gas industry to rivals or ratify the European Energy Charter, which would entail opening access to its pipelines to third countries.

Russia, meanwhile, is pushing for access to gas distribution in Europe, a move that worries the EU which already gets a quarter of its gas from Russia.

SUPPLY DIVERSITY U.S. Energy Secretary Sam Bodman reassured producers on Wednesday that the United States would need more energy in the years to come despite a long-term aim to cut oil dependence.

As fears over disruptions to already tight global oil supplies, especially from Iran, keep prices above a barrel, Bodman also called for coordinated of use of emergency fuel stocks and diversification of energy supply routes.

OPEC, which is likely to remain the main source of incremental oil output in the years ahead as production growth slows in Russia and other countries, said consumers should develop a comprehensive demand management strategy.

''Energy security has two sides. It's not just the upstream but downstream has to be addressed with the same vigour,'' Adnan Shihab-Eldin, an official from OPEC's Secretariat, told Reuters.

In a rare sign of agreement, the U.S. and Russian agendas appear to converge on atomic power as a key carbon-free form of power generation. They have both backed a major campaign of nuclear plant construction to replace fossil fired plants.

''The Russians are pushing the nuclear issue very hard,'' said one European minister attending the Moscow talks.

He added the move faced resistance from G8 member Germany, which is phasing out nuclear power.

REUTERS