Putin hosts meeting of `gas OPEC' members

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Consumers eye summit nervously after Russia's energy clash with Kiev

Dec 23, 2008 04:30 AM

MOSCOW–Russia will oversee the creation of a more formal group of gas exporting states, further unsettling energy consumers worried by Moscow's clash with Ukraine over gas and by its closer ties with oil body OPEC.

It will host a meeting of energy ministers from at least 11 gas exporting countries such as Iran, Qatar and Venezuela – members of an informal club called the Gas Exporting Countries Forum (GECF) that Moscow has sought to strengthen.

Although Russia says this so-called ``gas OPEC'' is not meant to emulate OPEC's policies in setting output quotas, today's gathering will be closely watched by consuming nations.

Russian officials said the members would agree on a charter that would make GECF a more formal organization, with a headquarters in Russia's second largest city of St. Petersburg.

Russia's Prime Minister Vladimir Putin will attend the forum while President Dmitry Medvedev will host a dinner at the Kremlin this evening.

The global credit crisis has heightened Russia's dependence on revenues from oil and gas as the ruble slides and the government spends its cash pile to support the economy, so Moscow wants to increase its political clout on energy markets.

Medvedev said earlier this month that Russia is considering all options including joining the Organization of Petroleum Exporting Countries to defend its national interests. But the world's second-leading oil exporter offered no specific cuts or special deals to OPEC at a meeting in Algeria last week.

Russia supplies a quarter of Europe's gas needs and wants to increase its share to one-third by 2020. Russian gas export monopoly Gazprom stepped up pressure on Ukraine to pay debts yesterday, saying it had warned European customers about potential disruptions to gas transit and supplies should the company fail to clinch a deal with Kiev.

Ukraine, through which about 80 per cent of Russian gas exports to Europe flow, said it was ready to guarantee transit supplies in 2009.

Ukraine owes Gazprom around $2 billion (U.S.) for gas supplies and European Union leaders say they are watching the latest developments closely after a clash between the two states led to a cut in exports of the fuel to Europe in January 2006.

Reuters News Agency