BizAims

Worries in the west regarding the global economy went up to a new stage when Russia, Iran and Qatar announced that they were going to create a gas cartel.

The chairman of Gazprom, which is world's largest extractor of natural gas and the biggest company in Russia, Alexey Miller, stated that the three companies were creating a "big gas troika". He mentioned that the decision to create the carted would mean increase in prices for hydrocarbons.

(About Russian’s economy see “Development of ex-Soviet republics: Russia”)

"We are united by the world's largest gas reserves, common strategic interests and, which is of great importance, high cooperation potential in tripartite projects. We have agreed to hold regular - three to four times a year - meetings of the gas G3 to discuss the crucial issues of mutual interest," said Miller.

The statement of Gazprom's chairman is likely to tense the situation on the west, pushing it to focus on energy alternatives, such as wind. Miller arranged a meeting at Tehran with Gholamhossein Nozari, petroleum minister of Iran, and Abdullah bin Hamad al-Attiyah, deputy prime minister of Qatar, who is also the country's oil and energy minister. Gazprom's representative announced that the group was setting a technical committee, featuring experts and specialists who would discuss the realization of cooperative projects, which would include a value chain ranging from geological exploration to marketing, The Guardian reports.

Despite the fact that Russia decided not to state the term "cartel," the Iranian side, and namely Nozari, at a news conference said everything loud and clear: "there is a demand to form this gas Opec and there is a consensus to set up gas Opec."

On Friday Opec will held a meeting where its members will analyze the ways to drive prices for oil. At the same time Miller said that the prices for fossil fuels would increase. "We share the opinion that oil price fluctuations don't put in question the fundamental thesis stating that the era of cheap hydrocarbons has come to an end."

At one of its recent meeting the European commission announced that it votes against the creation of organizations that might put a ceiling on competition. Ferran Tarradellas Espuny, the spokesman of the European commission outlined that the European commission considers that energy supplies should be marketed should be traded in a free market. Western analysts believe that Russia and Iran would take advantage of the cartel to pursue their political goals.

Representatives of western Europe raised concerns after Moscow cut off gas to Ukraine during the political and commercial disagreements. As for Iran, then its leader stated that they would choke off oil shipments coming from the Persian Golf in case of assault on the country.

The meeting, which will take place in Tehran, will need to be further discussed at other meeting in Russia and Qatar. However, the first meeting is the most important step forward to the creation of such group. It is worth mentioning that the idea was proposed in January 2007 by Ayatollah Ali Khamenei, Iranian leader.

About half of European Union's gas is imported from Russia and Moscow gained a tight hold on gas supplies, controlling the majority of pipelines from Russia and central Asia. According to James Cordier, president and head trader of Florida Liberty Trading Group and OptionSellers.com, the idea to try to control supply markets is a good one. Although it won't affect oil, it is still advantageous to deliver natural gas where it should go and control the supply to be able to control the price.