Russia, Iran and Qatar took their first serious steps toward forming an OPEC-style cartel for natural gas on Tuesday, a prospect that has unnerved energy-importing nations in Europe and the United States.
The three countries together account for 60 percent of the world's gas reserves, and Russia and Iran have both been accused of using their hold on energy supplies to bully neighboring countries. The European Union, which is heavily dependent on Russian gas, criticized the proposal, saying “energy supplies have to be sold in a free market.”
Russia, which most recently came into confrontation with the West over its five-day war with Georgia in August, has been accused of using its hold on energy supplies to exert influence on neighboring nations, particularly Ukraine. Its energy grip adds to its leverage in disputes over other issues, too, such as U.S. missile defense plans.
For its part, Iran, in its standoff with world powers over its nuclear program, has threatened to choke off oil shipments through the Persian Gulf if it is attacked.
Experts say a natural gas cartel that resembles the Organization of Petroleum Exporting Countries group would not have the same influence on prices as OPEC has on oil.
But it could still have benefits for gas-producing countries. Such a body would allow its members to potentially wield more influence on world prices, particularly in Europe and Asia, than they can alone.
“To try to maneuver the supply … makes perfect sense,” said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com. “Just because it doesn't have the clout of oil, it's still in their best interest to deliver natural gas where it needs to go and manage supply in order to help manage the price.”
Plans for a gas cartel also anticipate a future in which global crude supplies will become more scarce and expensive.
Liquefied natural gas could be traded as a commodity similar to oil at some point in the future, and the move by Russia, Iran and Qatar for closer cooperation appears to anticipate that, said Konstantin Batunin, an analyst with Moscow's Alfa Bank.
The gathering in Tehran, which included the chief executive of Russia's state-controlled energy company Gazprom and the oil ministers of the other two nations, appeared to be the most significant step toward the formation of such a group since Iran's supreme leader, Ayatollah Ali Khamenei, first raised the idea in January 2007.
Two more meetings, in Qatar's capital and in Moscow, are needed to reach a final deal, according to the Iranian Oil Ministry's Web site. No timeframe was given.
The prospect of a gas cartel 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.