Are you sure?

Putin says OPEC-style gas group is „good proposition”

Russian President Vladimir Putin said a proposal that natural gas producers should co-ordinate supplies to stabilize prices is „a good proposition.”

„We are very interested in it,” Putin said at a press conference in Doha, Qatar, yesterday. „We have to prepare for such a cartel. First there must be some coordination. We have to avoid the problems of other energy organizations.” Putin, who oversees the world's largest gas reserves, said on February 1 Russia may consider forming a gas group similar to the 12-member Organization of Petroleum Exporting Countries. European leaders have raised concern Russia is using its natural resource wealth as a political tool, undermining the reliability of its energy supplies, a charge Putin denied this month. „We will work together to defend the needs of energy exporters,” Putin said today. „We need to coordinate our relationship with customers.” Iran will ask members of the Gas Exporting Countries Forum to turn the body into an OPEC-style group to control natural gas pricing and supplies, Iran's oil ministry told Bloomberg February 6. Oil and gas are different, because demand for oil directly affects its price, while gas contracts are very long term, so it is difficult to manager prices, Putin said yesterday.

„It's very difficult because contractually gas is very different,” Abdullah bin Hamad al-Attiyah, Qatar's energy minister, told reporters at the Abu Dhabi Economic Forum held in the United Arab Emirates February 5. Putin was in Qatar on the second leg of a trip that took him first to Saudi Arabia, the first ever visit to the kingdom by a Russian president. Russia and Saudi Arabia are the world's largest energy producers. The two countries should cooperate, not compete, in the world energy market, Putin told Saudi and Russian business leaders in remarks posted on his Web site. OAO Lukoil, Russia's largest oil producer, plans to invest about $2 billion to develop a Saudi Arabian field, after the company found natural gas and gas condensate at its first well in the Middle Eastern country. Lukoil found an estimated 620.5 million barrels (85 million tons) of hydrocarbons at Block A in the northern Rub al-Khali basin, said Grigory Volchek, a spokesman at Lukoil Overseas Holding Ltd. The company estimates the whole deposit may hold about 700 million tons of oil equivalent.

„This is the first discovery a Russian company made in the post-Soviet period in Saudi Arabia,” Volchek said in phone interview from Saudi Arabia during Putin's visit. Also accompanying Putin was Vladimir Yakunin, president of Russian Railways, which is looking to build railways and infrastructure in the country, Russian Railways said in a statement yesterday. Yakunin said the Saudi transport authorities were looking to expand the railway system to 5,000 kilometers (3,100 miles) from 3,600, and that specific documents may be signed in the near future, according to the statement. The total cost of the project to upgrade the railways may exceed $1 billion, he said. Putin said a proposal by Saudi businessmen to establish a Saudi-Russian bank was an interesting proposal, in remarks posted on his Web site. The Russian leader was due to continue to Jordan later yesterday for the third leg of the trip, before returning to Moscow today. (Bloomberg)