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13 Jun, 2008 12:02

Is Russia losing interest in a gas cartel?

Russia has postponed negotiations on the gas equivalent of oil’s OPEC until October. Moscow helped initiate the Gas Exporting Countries Forum (GECF) – but now its interest seems to be fading. Experts say Russia is keen to access the resources o

The idea of uniting 15 gas suppliers has been voiced by Russia and Iran since 2001. The 15 governments have met but have yet to adopt a charter or membership structure.

With oil prices driving up the cost of gas, Russia is not ready to give up its independence in setting gas prices.

Valery Yazev, the head of the Russian Gas Union, says if the country “enters any union, it will lose part of its sovereignty”.

“We think the creation of a gas OPEC is very positive in terms of common price formation, access to new deposits and new transport routes. We are still talking but Russia is not in a hurry. Besides, the new Russian government has just come to power,” he said.

However, some ministers in the government don’t like the idea of cartels. Speaking at the St. Petersburg economic forum, Russia’s Finance Minister Aleksey Kudrin questioned the ability of oil and natural gas cartels to cut market risks.

“I have a cautious attitude to organisations like OPEC and its gas equivalent. Those institutions cannot reduce market risk or price fluctuation,” he said.

Vladimir Sibiryakov of Trust Bank says Russia supported the idea of a gas OPEC in order to gain access to the gas resources of other members of the cartel:

“Gas OPEC membership will enable Gazprom to more easily gain licences for gas deposits in  Middle Asia, North Africa and the Middle East. Gazprom may also negotiate more favourable prices on gas from these countries and the company needs that to fill its South Stream pipeline.”

A cartel would also address the issue of competition faced by Gazprom from countries like Algeria in supplying gas to the European market.

So, it seems that Russia wants to have its cake and eat it. On the one hand, it is keen to set gas prices independently, while on the other it is seeking to unite major gas suppliers and to create a bloc that could influence global political and energy decisions.