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Archive for Wednesday, October 22, 2008

Prospect of gas cartel worries West

US, Europe fear Russia, Iran and Qatar may use energy as weapon

October 22, 2008

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— Russia, Iran and Qatar took their first serious steps toward forming an OPEC-style cartel for natural gas on Tuesday, a prospect that has unnerved energy-importing nations in Europe and the United States.

The three countries together account for 60 percent of the world's gas reserves, and Russia and Iran have both been accused of using their hold on energy supplies to bully neighboring countries. The European Union, which is heavily dependent on Russian gas, criticized the proposal, saying "energy supplies have to be sold in a free market."

Russia, which most recently came into confrontation with the West over its five-day war with Georgia in August, has been accused of using its hold on energy supplies to exert influence on neighboring nations, particularly Ukraine. Its energy grip adds to its leverage in disputes over other issues, too, such as the United States' missile defense plans.

For its part, Iran, in its standoff with world powers over its nuclear program, has threatened to choke off oil shipments through the Persian Gulf if it is attacked.

A gas cartel to determine supply and influence prices could extend both countries' reach in energy and politics, particularly if oil prices bounce back to the highs seen earlier this year - prompting politicians, businesses and consumers to look toward cleaner burning natural gas and other alternative fuels.

The gathering in Tehran, which included the chief executive of Russia's state-controlled energy company Gazprom and the oil ministers of the other two nations, appeared to be the most significant step toward the formation of such a group since Iran's supreme leader, Ayatollah Ali Khamenei, first raised the idea in January 2007.

"Big decisions were made," said Iranian Oil Minister Gholam Hossein Nozari. The three countries will "seriously pursue the formation of an organization of gas-exporting countries," he added.

Two more meetings, in Qatar's capital and in Moscow, are needed to reach a final deal, said his Qatari counterpart, Abdulla Bin Hamad al-Attiya, according to the Iranian Oil Ministry's Web site. No timeframe was given.

"We are consolidating the largest gas reserves in the world, the general strategic interests and, what is very important, the high potential for cooperation on three-party projects," said Alexei Miller, the Gazprom chief. What he called the "big gas troika" would meet three or four times a year.

The prospect of a gas cartel has raised concern in the United States and around the 27-nation European Union, which depends on Russia for nearly half of its natural gas imports. Moscow, which controls many of the European pipelines delivering gas from Russia and Central Asia, already has a tight hold on supplies.

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