Russia, Iran, Qatar Discuss OPEC-style Gas Cartel

TEHRAN, Iran –

The meeting appeared to be the first serious talks about the creation of such a cartel since Iran's supreme leader, Ayatollah Ali Khamenei, first raised the idea in January 2007.

The prospect has raised concern in the United States and around the 27-nation European Union, which depends on Russia for nearly half of its natural gas imports. Moscow, which controls many of the European pipelines delivering gas from Russia and Central Asia, already has a tight hold on supplies.

Russia has been accused of using energy as a weapon, in particular in its disputes with neighboring Ukraine. European Union leaders have said they would stand against any Russian effort to create a gas cartel, fearing energy prices — and Russia's political clout — could rise further as a result.

Iranian Oil Minister Gholam Hossein Nozari said Tuesday that the three countries with the largest natural gas reserves will "seriously pursue the formation of an organization of gas exporting countries."

Nozari spoke on state TV after a meeting with his Qatari counterpart, Abdulla Bin Hamad al-Attiya, and the head of Russia's state-controlled energy company Gazprom, Alexei Miller.

He said the three parties decided to discuss the cartel further at the next meeting of their foreign ministers.

Many experts say a natural gas cartel that resembles the Organization of Petroleum Exporting Countries group would be tough to achieve.

Unlike oil, which is traded on an exchange that constantly updates the market price based on supply and demand, most gas is sold under tight contracts that allow buyers to lock in prices for up to 25 years. As a result, a cartel would likely have little influence.

The formation of a gas exchange also would be difficult because most natural gas is delivered via pipelines and is easier than oil to ship around the world to different buyers. Pipeline infrastructure also requires significant investment that often makes long-term contracts necessary.

Former Russian President Vladimir Putin and Qatar's emir, Sheik Hamad bin Khalifa Al Thani, announced in April 2007 they would explore the creation of a cartel to represent the interests of producer countries in controlling the global market.

Russia and Qatar are two of the world's largest producers of natural gas, and tiny Qatar sits atop the world's single largest gas field.

A leaked confidential study by NATO economic experts in 2006 had warned that Russia may be seeking to build a gas cartel including Algeria, Qatar, Libya, the countries of Central Asia and perhaps Iran, and cautioned that an OPEC-like near monopoly would strengthen Moscow's leverage over Europe.

Because of growing demand and lessening supplies, the United States also has increasingly relied on natural gas imports in recent years.

Weeks after the Russian-Qatari announcement, U.S. Energy Secretary Samuel Bodman spoke out against the formation of a cartel. Appearing at an energy conference in Houston in February 2007, he said initiatives that seek to control the flow of energy supplies and circumvent the role of the market to set prices "are contrary to the long-term interests of both producers and consumers."


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