INTERVIEW-Oil investment restrictions hinder G8 planning
WASHINGTON, March 30 (Reuters) - The growing sway of state-owned oil companies with restrictive foreign investment rules has complicated efforts by the globe's biggest economies to plan for long-term energy use, a high-ranking U.S. Energy Department official said on Thursday.
With oil prices nearing record highs above $70 a barrel, energy security will be high on the agenda for the Group of Eight industrialized nations at their July summit in Russia.
"Resource nationalism" in nations like G8 host Russia and in Venezuela makes managing global energy supplies tricky, Karen Harbert, assistant secretary for policy and international affairs at the Energy Department, told Reuters in an interview.
"We find ourselves in a market that is extremely volatile. Spare capacity is extremely low, and we have resources that are now in geopolitically, geographically challenging and increasingly unfriendly areas for foreign direct investment," Harbert said.
"It's not just by pumping more oil that we can solve it and it's not just by wearing sweaters," Harbert said, calling on G8 nations to push for "a path forward on how responsible players in the energy market need to operate."
Oil prices are about $4 below the record $70.85 hit last year after hurricanes knocked out a quarter of U.S. energy production. They have climbed from below $20 in a four-year rally driven partly by fast-growing Chinese demand.
Finance ministers will also look at how to increase energy investment, which the International Energy Agency has pegged at $17 trillion through 2025.
But limitations on foreign involvement in many oil-producing countries means the bulk of the world's oil reserves are off limits to international companies.
"The need is only becoming more intense for these high-caliber, multinational companies to be involved, yet the market conditions are becoming increasingly hostile to that, so somewhere the rubber has got to hit the road," Harbert said.
Around 75 percent of reserves are in the Organization of the Petroluem Exporting Countries (OPEC) where access to oil is often protected.
Harbert cautioned Russia -- this year's G8 host -- to tread carefully as it sets future terms for foreign investment.
Russia's economy and energy ministries plan to submit a draft bill on foreign investment to the government this month. That plan would control investments in dozens of industries, but Russian officials say there is no plan to limit oil investments.
In another high-profile event, Chinese President Hu Jintao will come to Washington next month to meet with President George W. Bush.
U.S. Energy Department officials will likely meet with their Chinese counterparts to discuss energy conservation, Harbert said.
"We're going to be really focusing with the Chinese on energy efficiency and advanced technology, looking at clean coal technology and energy efficiency," she said.