Putin to Host ‘Gas OPEC’ as Russia Seeks Global Role

By Lucian Kim

Dec. 22 (Bloomberg) -- Prime Minister Vladimir Putin will host energy ministers from the world’s largest natural-gas exporters in Moscow tomorrow as Russia seeks to take a leading role among producers of the fuel.

Putin, who turned OAO Gazprom into a global energy company during two presidential terms, will personally open the Gas Exporting Countries Forum, which is set to agree on a charter transforming it from a loose, consultative body into a formal organization with a permanent secretariat.

This year’s annual meeting was delayed several times amid reports that member nations disagreed over the future role of the group. Western consumer countries have warned against the formation of a “gas OPEC,” or a cartel modeled after the Organization of Petroleum Exporting Countries. Gas Forum nations include OPEC members Iran, Algeria and Qatar.

“Maybe it’s a bright image, but the mechanisms of OPEC can’t be used on the gas market,” Alexander Medvedev, Gazprom’s chief of exports, said last week. “In this case, it’s not necessary to make comparisons.”

Russia, which supplies a quarter of Europe’s gas through pipelines, is locked into long-term contracts that don’t allow the flexibility and reach of the world oil market. Yet as demand grows for liquefied natural gas -- gas chilled to a liquid for transport by tanker -- a global market is forming that reduces the importance of pipelines and encourages spot trades.

‘Gas Troika’

Gazprom plans to start loading its first LNG cargo in February, opening up new markets for Russian gas in Japan, South Korea and North America. The state-run company formed a “gas troika” in October with Qatar and Iran for joint exploration and production projects. Together, the three countries hold more than half of the world’s gas reserves.

Four cities are vying to host the Gas Forum’s permanent secretariat, Medvedev said. St. Petersburg will compete for the honor with Algiers, Tehran and Doha, Qatar, he said.

During his presidency from 2000 to May this year, Putin consolidated state control over the country’s oil and gas industry, with Gazprom as the flagship for Russia’s new economic might. The Moscow-based company is pursuing projects from Libya and Vietnam to Alaska and Bolivia.

After oil prices started tumbling from a record in July, Putin’s deputy, Igor Sechin, began pushing for closer coordination with OPEC, of which Russia is not a member.

OPEC was founded in 1960 by Venezuela, Iran, Iraq, Kuwait and Saudi Arabia. The Gas Exporting Countries Forum held its first meeting in Tehran in 2001. The last ministerial meeting was held in Doha in April 2007. Forum members include Egypt, Nigeria, Malaysia and Trinidad & Tobago.

To contact the reporter on this story: Lucian Kim in Moscow at lkim3@bloomberg.net