By John Helmer in Moscow
Prime Minister Vladimir Putin tried sweet-talking the Prime Minister of Qatar, Sheikh Hamad Jabr al-Thani, in Moscow this week on “closer coordination” between the world’s leading exporters of natural and liquefied gas (LNG). At stake are the growing deliveries of shipborne Qatari LNG to European ports, versus the shrinking deliveries of Russian natural gas to the same market, across land by pipeline.
Qatar more than doubled its shipments of LNG into the European market last year, to 15.9 billion cubic metres. Gazprom is estimated to have suffered a reduction of 19 bcm delivered to Europe in the same period; about half of that loss was made up by Qatar.
In his press conference with al-Thani, Putin said: “Closer coordination in global markets and joint efforts in energy markets are in the interests of both our countries, especially with respect to the gas industry. As two of the world’s largest producers of hydrocarbons, Russia and Qatar are natural partners. As you know, gas producers joined together to form the Gas Exporting Countries Forum not long ago. Its headquarters are located in Doha, the capital of Qatar. Russia plays an active role in the forum. Its secretary general is a Russian. The forum is still in the initial stages. We would like to turn it into an effective tool for coordinating our actions on the world gas market. Everyone – producers, consumers and transit countries – stands to gain from this.”
Strangley, the prime minister’s website has mistranslated the Russian term Putin used — координация — as “cooperation”.
Putin also added that he had recommended Stroytransgaz, the pipeline company controlled by Gennady Timchenko, for “partnering with Qatar.”
The Gas Exporting Countries Forum (GECF) will convene next month in Oran, Algeria. The forum counts most of the world’s gas exporters, though several (Brunei, Indonesia, Iraq, Malaysia, Turkmenistan, and the United Arab Emirates) missed the December 2008 GECF session in Moscow. Russia, Qatar and Iran dominate the GECF, controlling an estimated 59% of global gas reserves. The missing group, including the US, which has shunned the GECF from the start, controls about 13%.
Prime Minister al-Thani refused to elaborate on the gas coordination discussion with Putin, using the term “cooperation” instead. At the joint press conference, al-Thani said: “we want to step up cooperation in all the areas that the prime minister has just mentioned – gas, oil, finance and trade. We have agreed that two Qatar companies will be sent here in April to look into these issues. A Russian delegation will come to Doha to look into opportunities in the gas industry.”
Al-Thani and his Qatari delegation also met with Gazprom senior executives, headed by Alexei Miller. Their meeting, according to Gazprom, “addressed the issues of interaction within the Gas Exporting Countries Forum. An emphasis was placed on the shared opinions regarding the establishment of a sustainable and transparent gas market, as well as improving energy security on the global level.” How much, or how little was shared is not disclosed.
The Qatari press has not elaborated either. But it has reported al-Thani’s speech to the Moscow State Institute for International Relations, where he “reiterated Qatar’s adherence to a strong need to resolve disputes by peaceful means as determined by the international law and renounce the use of force and other means of pressure and coercion.”
The Gazprom communiqué also reports that Miller showed al-Thani around “the Central Production and Dispatch Department [to get him] acquainted with the unique capabilities of Russia’s Unified Gas Supply System enabling to respond flexibly to gas demand fluctuations throughout the European continent and to take immediate decisions on gas production and transmission modes. The visitors were informed on the plans to expand the System in the eastern region.”
There is a hint of a quid pro quo in the Gazprom announcement. According to Gazprom, the Qataris are interested in a proposed new LNG project in the Arctic,
on the Yamal peninsula, while the Qataris are reported to believe that Gazprom is interested in working on Block D of Qatar’s North Field, which is to be tendered shortly. It lies close to Iran’s
South Pars field, in which Gazprom already holds a substantial investment and operational interest.
The Yamal LNG project began as a Gazprom project. In July of 2009, the control stake was bought by Novatek, another company in which Timchenko has a large stake. Novatek has said it is planning a feasibility study for an LNG plant and export terminal, with the possibility of joint participations by Gazprom, which continues to control gasfields in the area; and foreign companies. Named so far on the foreigners list for the Yamal LNG project are Shell, Conoco, Exxon, and Repsol.
Discussions have been reported in the GECF, and between Russia, Qatar and Iran, on measures to increase the equity stakes and operating roles in new gas projects by state-controlled energy companies, and relegate the well-known European and American energy companies to minority participation.