7 May 2014, 22:30

Russian-led 'gas OPEC' may emerge soon

Russian-led 'gas OPEC' may emerge soon

John McCain, channeling America's inner Mr. Hyde, has repeatedly stated that “the strategy of the US must be built in opposition to Russia's gas strategy, as this will be the end of Putin and his empire". Barack Obama promised to kick Gazprom out of Europe with American shale gas exports. However, there are hints that Russia may be silently preparing a countermove against the US with the help of a former American ally.

Qatar is generally considered a staunch supporter of Washington's foreign policy but America's plans to flood the global energy market with cheap LNG is a direct threat to the vital interests of Doha. Without the profits from gas exports, Qatar will have to give up on its plans for regional dominance and will even have a hard time surviving in the bitter struggle against its eternal rival, the Saudi Arabia. Willingly or not, Washington is now threatening to destroy the fundamental premise of Doha's prosperity and influence. Guided by the principles of realpolitik, Qatar's leaders are looking to forge new alliances in order to preserve its gas empire. There is no better reason for a strong friendship than having a strong common foe. After Washington shot itself in the foot by alienating both Moscow and Beijing, thus helping forge a strong alliance between Russia and China, Obama is now on the verge of unwittingly creating a global natural gas cartel.

On May 6th, Russian Foreign Ministry said on its website that Deputy Foreign Minister Mikhail Bogdanov visited Doha. The results of the unannounced visit are quite interesting. First of all, “the Emir of Qatar praised the compelling and consistent policy of the Russian Federation in international and regional affairs”. Such opinion clearly shows that Doha is not going to play according to State Department's playbook that requires every US ally to condemn and isolate Russia. It may be speculated that the ruthlessly efficient rulers of the Emirate appreciate the uncompromising style of Moscow's foreign policy.

However, the main result of the visit is not about diplomacy, it is about natural gas. According to Russia's Foreign Ministry, “at the same time, emphasis was put on the need to accelerate the establishment of coordination within the Gas Exporting Countries Forum (GECF), as well as on the increase in investment cooperation” . This is a very serious move. The Gas Exporting Countries Forum was established in 2001 as an attempt to create an OPEC style organization for natural gas, but it has been dormant for years. Under the current circumstances, the main participants have very strong incentives to leave their conflicts aside and unite their efforts in influencing the global natural gas market. The three most important members of the GECF are Russia, Qatar and Iran. Given that Russia and Iran have recently achieved unprecedented levels of cooperation, including oil-for-goods and oil-for-electricity swap deals that will be worth more than 30 billion dollars, it is safe to assume that Moscow and Teheran will play on the same team in the global gas market. The recent statement of Iran's minister of industry who said that Iran is not interested in competing with Gazprom on the European market is a solid proof for this theory.

If Russia and Qatar start coordinating their export policies, the two countries can exert tremendous influence on the global natural gas flows and prices, given that both countries are the top two biggest natural gas exporters in the world. Together with Iran, they control over 57% of the world's natural gas reserves and that is a very conservative estimate.

The next GECF summit will be held this year in Doha and it may become the most important event of the year.

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