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Second Iran Oil Refining Forum (IOR2) | Summit 2008

Gas OPEC

Iran, Qatar & Russia Want “Gas OPEC”
after Meeting in Tehran

World gas powers Russia, Iran and Qatar pledged (Oct. 21) to strengthen cooperation and Tehran said there was a consensus to form an OPEC-style grouping, comments likely to worry Western consumer nations.

Iran’s Oil Minister Gholamhossein Nozari said he and Qatar’s Energy Minister Abdullah al-Attiyah and Chief Executive Alexei Miller of Russian gas export monopoly Gazprom agreed to establish a high-ranking natural gas committee.

Europe and the United States have warned against such a gas export body, saying it could pose a danger to global energy security and create room for price manipulation.

Miller at a joint news conference said the three sides had set up a “major gas troika” that would help implement joint projects.

Russia, Iran and Qatar are ranked the first, second and third biggest holders of natural gas reserves in the world and together boast more than half of the global total.

“We have made major decisions,” Nozari said after talks in the Iranian capital. “There is a demand to form this gas OPEC and there is a consensus to set up gas OPEC.”

Nozari and al-Attiya confirmed that the three parties agreed to prepare the organization’s constitution to be discussed at the next meeting of the Gas Exporting Countries Forum (GECF), due to be held in Moscow on November 17.

Major gas exporters have met informally for several years at the annual Gas Exporting Countries Forum. The GECF, which was established in Tehran in 2001, has neither an official charter nor a fixed membership structure. The countries which take part in its meetings include Algeria, Bolivia, Brunei, Egypt, Equatorial Guinea, Indonesia, Iran, Malaysia, Nigeria, Qatar, Russia, Trinidad & Tobago, the UAE and Venezuela. Norway has observer status.

Nozari hailed the talks as a “turning point” in expanding cooperation between Iran, Qatar and Russia and said senior officials from the three states would form the committee.

“Surely this gathering of gas exporting countries is to give assurances over gas supply to the world,” said Miller. “We have agreed to create a technical committee, and one of its missions will be to review projects that can be implemented in a trilateral way,’’ he said, adding that the committee would hold its first meeting in Qatar’s capital Doha in a few days time.

Iran wants to turn it into a more formal organization akin to the Organization of the Petroleum Exporting Countries, the 13-member grouping which makes output decisions that can sway the oil price.

Qatar’s Attiyah said: “God willing, in the next meeting of the gas exporting countries, they will affirm the establishment of the organization.”

Europe and the United States have warned against such a gas export body, saying it could pose a danger to global energy security and create room for price manipulation.

Miller said: “We have decided to be in close contact and we can say that today a major gas troika was formed.”

Some analysts say any gas OPEC could be expected to share insights on upstream contract terms with investors rather than act on restricting gas supply as the oil OPEC does.

“Surely this gathering of gas exporting countries is to give assurances over gas supply to the world,” said Miller, whose country is the world’s largest natural gas exporter.

Iran is still a relatively small exporter, with U.S sanctions over Tehran’s nuclear activities slowing development of its gas sector. Major European companies have shelved or scrapped multi-billion-dollar projects in the Islamic Republic.

Russia has been a reluctant backer of U.N. sanctions imposed on Iran over its nuclear program, which Tehran says is to generate electricity.

Nozari hailed the talks as a “turning point” in expanding cooperation between Iran, Qatar and Russia and said senior officials from the three states would form the committee.

Miller said the new body would “review projects and implement joint projects. This will range from exploration, refining and selling gas.”

The Tehran meeting supported the initiative for creating an international Club of Experts and Journalists specializing in the energy sector. The aim is to facilitate the receipt by the most recognized specialists of first-hand information concerning the urgent issues of the oil and gas sector. At the forthcoming meeting of the Gas Exporting Countries Forum in Moscow other Forum participants will be offered to join the establishment of this Club, which is planned to be named the “Energy Pole.”

The parties also touched upon issues on the current condition of the hydrocarbon market. As Alexey Miller underscored, “We share the opinion that oil price fluctuations don’t question the fundamental thesis that the era of cheap hydrocarbons has come to an end, and the parties will proceed from this standpoint in their work.”

Meantime, the Russian Foreign Minister, Sergei Lavrov, has also defended the formation of an organization of gas-exporting countries similar to OPEC. Lavrov told journalists one day after the Tehran meeting that expansion of natural gas cooperation between Doha, Moscow and Tehran was a ‘healthy phenomenon’. He added that the current fluctuations in oil prices were a negative factor which would affect gas prices as well.

Such an alliance would have little direct impact on the United States, which imports virtually no natural gas from Russia or the other nations. But Washington and Western allies worry that closer strategic ties between Russia and Iran could hinder efforts to isolate Tehran over its nuclear ambitions. In addition, the United States opposes a proposed Iranian gas pipeline to Pakistan and India, key allies.

In Europe — which counts on Russia for nearly half of its natural gas imports — any cartel controlled by Moscow poses a threat to supply and pricing.

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 bully its neighbors, particularly Ukraine.

Moscow cut natural gas exports to the former Soviet republic over a price dispute during the dead of winter in 2006 — a cutoff that caused disruptions to European nations further down the pipeline.

The 27-nation European Union expressed strong opposition to any natural gas cartel, with an EU spokesman, Ferran Tarradellas Espuny, saying: “The European Commission feels that energy supplies have to be sold in a free market.”

The gathering in Tehran 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.

 

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