Russia & Other Energy Exporters Are Forming A Gas Cartel.

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What has come to NATO's notice is a development known for months: Russia wants to have an OPEC-like cartel of gas exporting states established. APS understands that a group within the Kremlin has been working on such a cartel, which would group Russia, Iran, Qatar, Algeria, Kazakhstan, Turkmenistan and Uzbekistan, as well as other gas exporting countries.

Reuters on Nov. 14 reported "alliance sources" as saying: "The warning of a Russian-backed 'OPEC for gas' came in a confidential report by NATO's economic committee which was presented to alliance countries last week. Regular contacts already take place among gas exporting countries under the Gas Exporting Countries Forum (GECF), which was created in May 2001".

Energy ministers of the GECF, whose countries control about two-thirds of the world's reserves of natural gas, say the forum is only for exchanging information and is not a cartel in the making. The GECF idea was conceived in late 2000 by a group of Iranian and Algerian experts gathered in Tehran by APS Energy Group President Pierre Shammas. At the time, the Algerian group was headed by Chakib Khelil, who then was a senior adviser to President Abdelaziz Bouteflika.

Shortly after that Tehran meeting, Khalil became minister of mines and energy in Algeria. After follow-up talks with his Iranian counterpart, Bijan Namdar Zanganeh, the two agreed actively to establish a gathering of natural gas exporting states. The first meeting of those states, which took place in Tehran in May 2001, was organised by Iran's OPEC Governor and top ministerial adviser Hossein Kazempour Ardebili.

The next meeting of the forum was held in Algiers, when it was reiterated that the forum would have as many member-states as possible. But it was decided that the GECF would only be a consultative grouping with no secretariat and no cartel-like structure.

The NATO report highlighted on Nov. 14 by Reuters concluded that Russia, which supplied a quarter of Europe's gas, was aiming to draw Algeria, Libya, Qatar, the countries of Central Asia and possibly Iran into a cartel wielding enormous power over the gas market. That would strengthen Moscow's hand in relations with Europe and particularly with neighbours such as Ukraine and Georgia, which Moscow wants to dissuade from moving closer to Western bodies such as NATO and the European Union.

Reuters said of the NATO report: "It quotes [Russian Foreign Minister Sergei] Lavrov as saying as much in private meetings with other Russian officials". Reuters said the "alliance source" had seen the document, referring to the political power such a cartel could wield. Reuters said a NATO spokesman declined to comment on the report because it was confidential.

The Financial Times first reported the existence of this report in an article on Nov. 14. Reuters quoted an "alliance source" as saying the report represented the views of experts from national capitals rather than an official NATO view, and noted that it made no recommendations on possible NATO action.

Reuters quoted a "Kremlin official" as denying that Russia was discussing the creation of a gas cartel, pointing out that, as president of the G-8 this year, Moscow had sought greater co-operation between energy producers and consumers. Reuters quoted Arkady Dvorkovich, head of the Kremlin's economic staff, as saying at a briefing: "This isn't happening", saying experience showed that cartels were generally not effective.

Dmitry Peskov, deputy Kremlin spokesman, was quoted in the FT as saying there was "no substance at all" to the suggestion that Russia was seeking a gas cartel. Peskov, however, said: "I think the authors of such an idea simply fail to understand our thesis about energy security. Our main thesis is interdependence of producers and consumers. Only a madman could think that Russia would start to blackmail Europe using gas, because we depend to the same extent on European customers".