Saturday, August 23, 2014


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Russia Says Gas Forum Will Not Be OPEC-Like Cartel

Russia says there is no intention of creating a cartel of natural-gas producers.
Russia says there is no intention of creating a cartel of natural-gas producers.
(RFE/RL) -- Ministers from gas-exporting countries have met in Moscow to finalize the rules of an emerging organization, the Gas Exporting Countries Forum (GECF). The organization groups Russia, the world's biggest gas producer, with more than a dozen other producing nations.

The forum has said it is simply working to finalize and approve its charter during its session in Moscow. But some in the West have expressed fears that the GECF, which has been meeting annually since 2001, is seeking to establish a price-fixing grouping similar to the oil cartel OPEC.

The GECF will group together many of the world's largest natural-gas producers, including Russia, Iran, Qatar, Venezuela, and Algeria. Those five countries control nearly two-thirds of the world's natural-gas reserves and account for 42 percent of global production.

Russian Prime Minister Vladimir Putin speaks at the opening of the GECF meeting in Moscow.
At the meeting, Russian Prime Minister Vladimir Putin predicted that the world financial crisis and rising production costs would lead to the rise of natural-gas prices.

"Despite the current decrease in prices for energy resources, the era of cheap energy resources, particularly the era of cheap gas, is definitely coming to an end," Putin said.

But he rejected as "baseless" fears that members of the forum would cooperate to set prices, and outlined Russia's vision for the grouping.

"In our view, the forum of gas-exporting countries should become a permanent organization with its own charter and headquarters, a structure that represents the interests of gas producers and exporters in the international arena and helps protect their interests and build civilized, market-based relations with consumers," he said.

Two-Way Street

Putin also said energy security is a two-way street.

"In our opinion, energy security lies in the following principles. For producers of energy resources, it is first and foremost a guarantee of sovereignty over their national stock of energy resources, as well as a responsibility to ensure regular, uninterrupted supplies to their consumers," Putin said. "But there is also a responsibility that must rest with consumer countries. It is their guaranteed ability to buy these resources in required amounts and on predictable conditions."

Analysts say that a cartel for natural gas makes far less sense than a cartel like OPEC, which meets regularly to agree upon production quotas in order to influence the price of crude oil on global markets.

Aleksandr Medvedev, the deputy chairman of Gazprom's board of directors, echoed that sentiment.

"OPEC mechanisms cannot be used in the natural-gas market because OPEC's main regulatory mechanism uses production quotas to maintain prices at a desired level," he said. "That is impossible in our work because our business is and will continue to be based, hopefully, on a system of long-term contracts with clear and strict obligations."

Russian Energy Minister Sergei Shmatko said ahead of the session that there is no intention of creating a cartel of natural-gas producers.

Shmatko says the forum aims to "guarantee an indispensable equilibrium between natural-gas suppliers" and to coordinate polices between consumer countries and producer countries.

Shmatko also said the Moscow meeting would try to establish what he calls the "rules of the game" between gas importers and exporters.

'Benefit Both Sides'

Gazprom spokesman Sergei Kupriyanov, meanwhile, has downplayed concerns in the European Union that the establishment of the GECF would harm the interest of European consumers.

"We hear calls for a unified EU energy policy and coordinated actions with regard to [gas] suppliers. What is that if not a similar organization [to a forum of gas exporters]?" Kupriyanov said. "It is our view that, to the contrary, cooperation at the level of a forum of natural-gas exporters with structures such as the European Union and the European Commission will benefit both sides."

The three countries with the world's largest gas reserves -- Russia, Iran, and Qatar -- have also been working create a mechanism for joint projects within the forum of GECF.

Iran sits on the world's second-largest proven natural-gas reserves after Russia. But so far, it has played only a minor role on the gas-export market. That's because there is huge domestic demand for natural gas in Iran, and because the country lacks foreign investment needed to build pipelines and other infrastructure for gas exports.

Qatar has the world's third-largest proven gas reserves and is targeting the No. 1 position in the liquefied natural gas (LNG) sector.

Others members of GECF are Nigeria, Libya, Malaysia, Egypt, the United Arab Emirates, Bolivia, Brunei, Indonesia, and Trinidad and Tobago.

Two other natural-gas producers, Equatorial Guinea and Norway, were attending the Moscow meeting as observers.
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