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Putin says Russia will consider forming a „gas OPEC”

Russia, which has the world's largest natural-gas reserves, will consider creating a natural-gas cartel, President Vladimir Putin said today, in a possible bid to strengthen the country's position in trade and investment talks.

„A gas OPEC - that's an interesting idea. We will think about it,” Putin said during an annual news conference in the Kremlin with domestic and foreign reporters. Iran, the holder of the second-largest gas reserves, suggested the countries join forces earlier this week. Natural gas prices in New York gained 2.3 to $7.845 per million British thermal units. European leaders have raised concerns Russia is using its natural resources wealth as a political weapon, undermining its reliability as an energy supplier, a charge Putin denied today. State-run OAO Gazprom, Russia's sole gas exporter, supplies more than a quarter of Europe's needs for the fuel. Government and Gazprom officials had denied Russia is considering forming a gas OPEC with Iran and Algeria, which combined with Russia own half the world's natural gas reserves. Putin's comments may be intended to strengthen Russia's bargaining position as it seeks to improve trade terms with Europe and buy European assets, analysts said. Russia is also trying to build economic ties with the Middle East, and bid for oil and gas fields in Iran.

„Putin is probably reminding Europe that Russia has options that could run counter to European interests,” said Chris Weafer, chief strategist at Moscow's Alfa Bank and an expert on OPEC. „Russia's key priority this year is to bring down administrative and political barriers to investment in Europe.” Russia has benefited from creating a balance between its relations with energy consumers and producers and is unlikely to upset that by joining a cartel, Weafer said. „Russia has always met and will continue to meet its obligations to supply its customers,” Putin said today. Security Council head Igor Ivanov denied Russia is in talks to set up a cartel with Iran, after the Islamic Republic's leader Ayatollah Ali Khamenei suggested the idea during a meeting in Tehran earlier this week. Iran's Hassan Moradi, a member of the parliament's energy commission, said yesterday that Algeria, Morocco and Venezuela have enough to make them potential candidates for such a project, even without Russia. Russia and Algeria, Europe's two biggest suppliers of natural gas, signed an energy cooperation agreement on January 21 that the European Union pledged to monitor because of concerns it may develop into an alliance that could control gas prices. Algeria supplies almost 10% of Europe's gas. Russian Industry and Energy Minister Viktor Khristenko and his Algerian counterpart Chakib Khelil at the time rejected the idea of a cartel. Gazprom Deputy CEO Alexander Medvedev scorned the idea of a cartel while at the World Economic Forum in Davos, Switzerland this week, saying it was unnecessary. He was unavailable for comment when called by Bloomberg today. (Bloomberg)