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22 Oct, 2008 02:06

Gas troika to become new player in energy

Russia, Iran and Qatar have agreed to work together to find and produce gas. But heightened cooperation between gas producers is worrying to Western consumers.

Three nations, which control over half the world’s gas, agreed on Tuesday to set up a technical committee to examine joint projects.

Unlike the Iranian oil minister, Gazprom CEO Alexei Miller didn't call the new grouping a “gas OPEC” but dubbed it a “major gas troika”

“Considering the strategic interests of our countries regarding natural gas as well as the potential and capacities of the three countries in the gas industry, we've decided to keep in regular and close touch with each other in the future.”

The three countries are considering setting up a center for financial affairs for the organization in Doha, a technical center in Tehran and a market survey center in Moscow. Europe and the US have previously warned against the creation of an OPEC-style body to control gas prices. Chris Weafer of Uralsib says the troika won't be the cartel that many nations fear.

“Russia’s always been very keen to portray it not as an organization which would set prices, or keep prices high, which is of course the big fear in the west.  But more a cooperation between gas countries where they can share the cost of developing new technologies and basically coordinate the development of this new LNG business.”

Roland Nash of Renaissance Capital says that gas prices may follow fluctuations in the oil price, and that such an organization will help producers to stabilise prices, not regulate them.

“It gives more strength to the suppliers of energy, relative to the consumers. But that’ doesn’t mean you have to have necessarily more confrontation. You can have hopefully dialogue which results in a price which makes sense for both sides.”

The newly formed gas troika will meet again soon at the annual Gas Exporting Countries Forum, scheduled to take place in Moscow on November 17.