Cartel in the
"Gas OPEC" to be Created in Doha in April
By Mikhail Zygar and Natalia
Kommersant has learned that last week
some of the world's leading natural gas exporters reached a final agreement on
the creation of a so-called "gas OPEC."
The consortium of gas-rich
countries, which at the moment includes Russia, Iran, Qatar, Venezuela, and Algeria, is due to be formally organized in the
Qatari capital of Doha on April 9.
The appearance of such a
powerful player in the energy arena will undoubtedly meet with an extremely
negative reaction from the United States and the European
Last week vague conversations
about the possible creation of a natural gas OPEC
suddenly took off into the realm of the actual. Discarding the skepticism
usually expressed about the idea by the leaders of the world's major
gas-exporting countries, last Tuesday Algerian President Abdelaziz Bouteflika
said that an OPEC-style gas cartel is an interesting idea and that he personally
supports the creation of such an organization. His interest in participating in
talks aimed at founding a worldwide gas cartel was quickly echoed by the
president of Trinidad and
Tobago, a Caribbean nation whose small size
belies its influence in the world gas market.
The final spur was a
statement from Venezuelan Energy and Oil Minister Rafael Ramirez, who said that
"supports the idea of a gas OPEC that will supplement OPEC and that will be an
excellent mechanism of regulating the two main commodities on the energy
There was a common thread
running through the statements made by all of these officials: following the
example of Russian
President Vladimir Putin, they all suddenly "realized" that the
energy conference that will take place in Doha in April would be the perfect place to
discuss new developments in global energy policy. During his recent visit to
Qatar, the Russian president even
promised to send Energy and Industry Minister Viktor Khristenko and Gazprom
head Alexei Miller to the conference.
The conference in Doha, which is scheduled
for April 9, is actually the next meeting of the Gas-Exporting Countries Forum
(GECF), an organization that was founded in 2001 to unite the countries that
together control more than 70% of the world's gas reserves. According to
experts, until now the organization has had little influence, political or
otherwise. Following recent statements from the leaders of the countries in the
GECF in favor of a gas cartel rather than a dead-end gas club, however, the
stage is set for some serious changes.
sources in Arab diplomatic circles have confirmed that the forum on April 9 in
considered a convenient moment to announce the creation of a real gas cartel and
that the necessary political agreements are already close to being completed.
"Of course, the basic discussions are being held not by the gas companies but by
the politicians, and at a very high level — sometimes even circumventing the
Foreign Ministries," an Arab diplomat told Kommersant.
Sergei Kupriyanov, the deputy
head of the Russia Department of Information Policy at Gazprom, confirmed for Kommersant that an extremely high-level
delegation (i.e., including Alexei Miller) will be going to Doha, but he declined to
comment on the existence of any particular agenda for the conference or to
confirm that any agreements will be signed.
There have not yet been any
reports concerning the currency in which the new gas cartel will conduct
trading. However, considering Iran's long-standing plans to peg its
energy transactions to the euro, it is likely that the Iranians will lobby for
the adoption of the euro as the cartel's official currency.
Iran is also the fiercest
supporter of the idea of forming a gas OPEC. The country's spiritual leader,
Ayatollah Ali Khamenei, was the first to officially mention the possibility of
creating such an organization, although the idea has been being bandied about in
Russia for some time. A particularly
active Russian lobbyist for the project has been Valery Yazev, the head of the State
Duma's Energy Committee.
President Putin has also
voiced his support for the idea more than once. "Who told you that we turned
down an offer to create a cartel? Quite the opposite, in fact. I said that it
was an interesting suggestion!" said the Russian leader to journalists in
Qatar last February. Although Russian
Industry and Energy Minister Viktor Khristenko has called the idea of a gas OPEC
"the fruit of a wild imagination" and Gazprom deputy director Alexander Medvedev
said that the creation of an OPEC-style gas cartel would be impossible, they
will obviously be reconsidering their stances.
There have been similar
disparities in countries other than Russia between statements made by
political leaders and those made by economists and businessmen in the energy
sector. For example, Abdullah bin Hamad al-Attiyah and Chakib Khelil, the energy
ministers of Qatar and
Algeria, respectively, said that they
do not see the necessity of creating a gas cartel. They were later
second-guessed by Qatari Emir Hamad bin Khalifa al-Thani and Algerian President
Bouteflika, who declared independently of each other that the project has a
Significantly, the project is
also now enjoying the active support of Venezuela, whose president just last week took
the step of creating a regional gas cartel uniting South America's main natural
gas producers: Venezuela,
Argentina. The only hitch in
Venezuela's plan is that the
country's volume of gas production is still not very large and its natural gas
exports are nonexistent, thus demonstrating that for President Chavez regional
and global gas cartels are primarily political rather than economic
In the West, the possibility
of a consortium of natural gas producers has provoked annoyance. "All
initiatives, new or old, to take control of the delivery of energy to the
markets or to limit the role of the market in setting prices all contradict the
long-term interests of both suppliers and consumers," said U.S. Secretary of
Energy Samuel Bodman soon after President Putin's meeting with the emir of
Europe is even more concerned by
the plan to create a gas OPEC. Last year, after Gazprom and the Algerian
state-owned gas company Sonatrach signed a memorandum of cooperation, European
Energy Commissioner Andris Piebalgs acknowledged that "the context of these
talks between Russia and
Algeria makes us nervous." If all of
the leading suppliers of Europe's energy were to unite in a cartel, the EU would
be put in a very vulnerable position, particularly since Brussels has recently been eyeing Algeria and Trinidad and Tobago as possible alternative
suppliers that could help the EU reduce its energy dependence on
Top managers at Gazprom make
no secret of the fact that one of the Russian gas giant's top priorities is "to
get into every gas heater in Germany" and the rest of the countries in
Europe. From a commercial point of view, this
is justified by the fact that Gazprom would receive $400-500 per thousand cubic
meters of gas by selling to the final consumer, much more than the $290 that it
gets from sales to a middleman. For everyday consumers, this may appear to be a
fairly good deal: by dispensing with Western European traders, they could
theoretically receive Russian gas for much lower prices. Local governments in
several regions of Germany have even expressed readiness
to sell stakes in their gas pipelines to Gazprom. If Gazprom realizes its goal,
however, it will enjoy a much more privileged position than, for example, the
European energy giants E.On or Gas de France, whose production of gas is much
lower than their volume of sales. If gas producers in Russia and Algeria were to
put their heads together to agree on a pricing system, that would effectively
sideline Western European traders in the energy market.
If in the future Gazprom
supplies gas directly to consumers in the EU and no longer depends at all on
European energy companies, Russia will have the ability to dictate its own
terms to Europe. The EU will become totally
dependent on Moscow's political will, and almost
no levers of counter-pressure will remain in Europe's hands.
Horrified by that prospect,
Europe is struggling to contain Gazprom's
expansion. In particular, European companies are trying to convince their
Russian colleagues that numerous specific restrictions and high taxes will cut
severely into the company's profits, making entry into EU domestic markets not
an entirely profitable proposition. So far, however, Gazprom is undeterred.
The Specter of
For the West, the most
frightening aspect of the plan for a gas OPEC is the word "OPEC" itself, which
conjures up images of the consortium of oil exporters that was created in 1960.
For more than ten years, the organization was toothless and wielded almost no
political or economic influence — much like the GECF today. In 1973, however,
the members of OPEC used the Arab-Israeli War as a pretext to impose an oil
embargo against the United
States and Western Europe
and to cut back on production, which precipitated a massive energy crisis.
Within six months, the price of a barrel of gas shot up from $2 to $12.
Iran and Venezuela, who
were among the founders of OPEC and who are now preparing to organize its gas
analogue, are obviously drawing a parallel between the two cartels with the
express purpose of making it clear that they are ready to use energy as a weapon
against the West, as they did in 1973. The West is similarly interpreting
Vladimir Putin's statements to mean that Russia will not
hesitate to use energy as a weapon against its neighbors.
European experts often repeat
that announcements concerning the creation of a gas OPEC are being made in an
excessively demonstrative manner, from which they conclude that the main goal of
the gas cartel's founders is just to give the West a good scare.
One of the most widespread
arguments for the unfeasibility of founding such an organization is that all
contracts for gas supplies are long-term, making it impossible to tinker with
prices at the drop of a hat. All of Gazprom's contracts with foreign customers,
however, stipulate that prices can be reviewed either quarterly or semiannually.
In addition, the gas market is functioning at full capacity with a set time lag
behind the oil market (gas prices are pegged to those for oil and other
petroleum products). In other words, questions of future delivery volumes and
the regulation of gas prices could well become subject to agreements between
gas-exporting countries within the framework of a gas OPEC.
The main weakness of the
emerging cartel lies in the difference of interests among its prospective
Not all of the leaders of the
world's gas producers are as radical in their outlook as Iran as Venezuela. For example,
Qatar is considered an ally
of the United
States, and according to the Qatari media open
anti-Americanism would have serious consequences for the country.
Meanwhile, the Algerian press
is casting doubt on the viability of such a cartel because of the uncertain
current state of relations between Algeria and Russia: despite
the memorandum signed by Gazprom and Sonatrach, the relationship between the two
companies is still in its infancy.
Accordingly, it may be easier
to mount a scare campaign by means of coordinating politics rather than