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Gas OPEC to lead to monopolization of gas export - extended

The establishment of a gas OPEC will lead to the monopolization of the export of this kind of fuel and a rise in its prices, Bijan Bidabad, a research professor of economics in Tehran University said to TrendCapital over the telephone. - Iran’s oil minister renewed a call to set up an OPEC-style grouping of gas producers but said such an initiative would take time, Iranian media reported on Tuesday.

The establishment of a gas OPEC was first initiated by Iran. “As Iran and Persian Gulf countries have a positive attitude towards the establishment of a gas OPEC the realization of this plan seems realistic. Russian is not expected to intervene in the plan in the near future, but the establishment of a gas OPEC is unavoidable,” Bidabad said. A charter of the organization of leading gas exporters, an international organization built up on the principles of the oil OPEC is expected to be introduced at the Forum of Gas Exporting Countries meeting to be held in June 2008 in Moscow. The charter of the new organization will fully correspond to the charter of the oil OPEC.

The United States opposes the establishment of the gas OPEC and says, that its establishment will create problems both for producers and consumers. It is likely to lead to a dramatic rise in gas prices. Russian experts say that the possible establishment of the gas OPEC cannot affect world gas prices. Timur Khairullin, an analyst at Antanta Capital said to TrendCapital, that there is no need to speak about the regulation of prices within the framework of the establishment of a gas OPEC as yet. Only a few countries will deal with the direction of gas and its volume of export. “Only five gas exporters (Russia, Iran and CIS countries) will coordinate the direction of gas,” Khairullin said. According Batunin, analyst of the Alfa Bank investment company, the establishment of the gas OPEC in short-range outlook is impossible. According to the analyst, in order to establish the organization it is necessary to hold auctions as in the case of oil-loading cargos. “Currently there is not enough free gas all over the world to hold those kind of auctions,” Batunin said.

The Forum of Gas Exporting Countries was first assembled in 2001 in Teheran. The forum does not posses a charter. The countries taking part in the forum include Algeria, Bolivia, Venezuela, Egypt, Indonesia, Iran, Qatar, Lybia, Malaysia, Nigeria, Oman, Russia, Trinidad and Tobago and Equatorial Guinea. (Trend Capital)



The United States and the European Union have said creating a body for gas, resembling the Organization of the Petroleum Exporting Countries, would endanger global energy security and make room for price manipulation. Analysts say contracts used in the gas trade may make it difficult to set up such a group. “Talks are being held. Of course, that is a time-consuming task, because as you know when the oil OPEC was established it took many years before it worked systematically,” Oil Minister

Gholamhossein Nozari told Iranian state radio. “The gas producers and the countries that own gas resources should reach a compromise to establish a gas OPEC. The ground is being prepared for that end,” the minister added. Nozari’s remarks were monitored on Iranian radio by the BBC. State radio said joint meetings would be held with Russia to establish an organization for gas exporting countries.

Iran, which sits on the world’s second largest gas reserves, has previously raised the issue with Russia, which has the biggest reserves and is the world’s biggest exporter. Russia and Iran, along with other gas producers, such as Qatar, Venezuela, Nigeria and Algeria, already meet as part of an informal club. Experts have said the gas forum is unlikely to become as influential as OPEC, because gas deals are done on a long-term basis, rather than the spot system by which oil is traded. Some gas contracts run for more than 25 years and they include formulas for smoothing out spikes in energy prices. The gas exporting nations forum met last year in Doha, Qatar, but failed to reach any specific deal. The next session is expected to be held in Moscow in June. (Reuters)