Russia, Iran, Qatar Form `Gas Troika,' Gazprom Says

By Ladane Nasseri and Greg Walters

Oct. 21 (Bloomberg) -- Russia, Iran and Qatar, holders of more than half of the world's natural gas, agreed to form a ``gas troika'' for joint exploration and production, OAO Gazprom said.

``We have agreed to create a technical committee and one of its missions will be to review projects that can be implemented in a trilateral way,'' Alexei Miller, chief executive officer of the Russian gas exporter, told reporters in Tehran today after talks with Iranian Oil Minister Gholamhossein Nozari and Qatari Oil Minister Abdullah bin Hamad al-Attiyah.

The U.S. and Europe have warned against the Iran-led initiative to create a ``gas OPEC' aimed at controlling supplies and prices. Russia's government has dismissed those concerns, saying closer cooperation with other producers in the Gas Exporting Countries Forum is meant to ensure present and future deliveries. This year's annual forum, which has been delayed repeatedly, is scheduled to take place in Moscow on Nov. 17.

``Big decisions were made today,'' Nozari said. ``There is a consensus to create this organization, and to prepare its constitution for the next meeting of ministers.''

Gas producers need to work together because of the ``huge'' costs of developing new fields and building pipelines, Russian Energy Minister Sergei Shmatko told German business leaders this month. Fears of a ``gas OPEC'' are overblown because there's already a ``quasi-cartel of consumers'' in developed economies, he said Oct. 2. Russia supplies a quarter of Europe's gas.

`Symbolic' Project

The initiative is for the moment ``symbolic,'' according to Ron Smith, chief strategist at Moscow's Alfa bank. ``The chance of this impacting natural-gas markets over the next 10 years is virtually nil.''

While oil is a global market, gas is ``still a patchwork of local markets,'' Smith said in a telephone interview. ``Any attempt to regulate natural-gas supply in one area of the world has only marginal impact in any other part of the world.''

Russia, the biggest oil producer after Saudi Arabia, is also seeking closer cooperation with the Organization of Petroleum Exporting Countries, which controls 40 percent of global crude output. OPEC Secretary General Abdulla el-Badri is scheduled to arrive in Moscow today for talks with Shmatko and other government officials.

``Part of the discussion today was related to oil output,'' Gazprom's Miller said. ``Producing nations, given their strategic interests, certainly need to coordinate together.'' Asked whether his country would support an OPEC decision to cut crude production when it meets on Oct. 24, he said, ``Russia has taken steps toward cooperation and will continue doing so.''

Gas Reserves

Russia holds 25 percent of the world's proven gas reserves, according to BP's Statistical Review of World Energy. Iran has 16 percent and Qatar 14 percent.

The three countries agreed to meet three or four times a year ``to discuss important questions in the development of the gas market,'' Miller said in an e-mailed statement following the talks. The ``gas troika's'' expert group will hold its first meeting in the Qatari capital, Doha, within a week.

``Fluctuations in the price of oil do not place in doubt the fundamental thesis that the era of cheap hydrocarbons is over,'' Miller said in the statement.

To contact the reporters on this story: Ladane Nasseri in Tehran at lnasseri@bloomberg.net; Greg Walters in Moscow gwalters1@bloomberg.net