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Moscow To Oversee Signing Of 'Gas OPEC' Charter

MOSCOW (Reuters) -- Russia will oversee the creation of a more formal group of gas exporting states, further unsettling energy consumers worried by Moscow's clash with Kyiv over gas and by its closer ties with oil body OPEC.

It will host a meeting on December 23 of energy ministers from at least 11 gas exporting countries such as Iran, Qatar, and Venezuela -- members of an informal club called the Gas Exporting Countries Forum (GECF) that Moscow has sought to strengthen.

Although Russia says this so-called "gas OPEC" is not meant to emulate OPEC's policies in setting output quotas, the gathering will be closely watched by consuming nations.

Russian officials said the members would agree on a charter that would make GECF a more formal organization with a headquarters in Russia's second-largest city of St. Petersburg, although the body would keep the same name.

Russia's Prime Minister Vladimir Putin will attend the forum, while President Dmitry Medvedev will host a dinner at the Kremlin.

Increase Political Clout

The global credit crisis has heightened Russia's dependence on revenues from oil and gas as the ruble slides and the government spends its cash pile to support the economy, so Moscow wants to increase its political clout on energy markets.

Medvedev said earlier this month Russia is considering all options, including joining the Organization of the Petroleum Exporting Countries to defend its national interests, although the world's No. 2 oil exporter offered no cuts or special deals to OPEC at a meeting in Algeria last week.

Russia supplies one-quarter of Europe's gas needs and wants to increase its share to one-third by 2020.

Russian gas export monopoly Gazprom stepped up pressure on Ukraine to pay debts on December 22, saying it had warned European customers about potential disruptions to gas transit should the company fail to clinch a deal with Kyiv.

An aide to the president of Ukraine, through which about 80 percent of Russian gas exports to Europe flow, responded that Kyiv was ready to guarantee transit supplies in 2009.

Ukraine owes Gazprom around $2 billion for gas supplies and European countries are also eyeing this dispute nervously after a row between the two states led to a cut in exports of the fuel to Europe in January 2006.

Big Gas Troika

Outside the GECF, Gazprom earlier this year signed a separate deal with Iran and Qatar, setting what it called a "big gas troika" to coordinate market policies, but denying it was seeking to influence prices.

"Regulating the gas market by setting production quotas is out of question...Until long-term contracts make up the base of gas business, setting production quotas can not be considered," Gazprom's export boss Aleksandr Medvedev said last week.

Most industry analysts agree that the nature of global gas markets, which do not use spot contracts, makes it almost impossible to set production quotas.

But long-term, take-or-pay contracts, when consumers have either to take agreed volumes of gas or pay fines, can backfire badly when oil prices slump.

Gazprom has already said many European clients have chosen to pay fines in the past months and reduce gas purchases below agreed volumes as they were still gaining by buying fuel oil.

The forum's country members include Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Trinidad and Tobago, UAE, Qatar, Russia, Venezuela, and two observer members -- Equatorial Guinea and Norway.