Russian president Vladimir Putin has recently indicated that Russia is interested in creating a ‘gas OPEC’ to organize supply activity and to ensure energy security. However, despite Putin’s insistence that the organization will not be a cartel and a price fixing organization, European nations seem to be alarmed following the development. Hinting at the European concern he said that his openness to co-ordinate with other suppliers will provide an assurance to European Union about reliance on Russian energy.
In last November, Nato economics experts had prepared a confidential report that had warned that Russia might be aiming to create a gas cartel including African and central Asian nations. The report also hinted that the gas cartel might include Iran as well. The report had created serious doubts and concerns among European leaders.
In the meantime, Iran’s supreme leader Ayatollah Ali Khamenei has also said recently that Russia and Iran could set up an organization of gas co-operation just as OPEC since both these countries control half of the total world’s gas reserve.
A notion of a gas cartel that influences prices in the short term has been ruled out completely by the participating countries. Algeria and other countries have described this notion as unachievable and undesirable. On the other hand, a long term gas co-operation seems to be moving ahead as Algeria’s national energy company, Sonatrach, is gearing up to participate in four Russian gas exploration deals.
Putin addressing the press had said, ‘We are not going to set up a cartel. But it would be correct to co-ordinate our activities with an eye to the solution of the main goal of unconditionally and securely supplying the main consumers of energy resources’. However, the experts are of the view that once this cartel is formed they will have great leverage in negotiating the prices of gas and consequently the origination, they fear, would start functioning like OPEC.
