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By John Helmer in Moscow

A meeting of the Gas Exporting Countries Forum (GECF) in Moscow this week has agreed on an organizational charter and a new headquarters, but stopped short of including all the gas exporting majors, and did not attempt to introduce a scheme for price controls for gas exports. But there was a quiet surprise the media have overlooked.

Western press coverage of the meeting focused on the price control issue, which the attending ministers dismissed as impossible to implement, and not on their agenda. “The difference between OPEC and the forum is very simple,” the Algerian energy minister Chekib Khelil was reported as saying. “OPEC looks at today, what happens on the market and makes the decision. The [gas] forum, of course, looks on today because it has to, but it’s more forward looking. It cannot control the volumes and price for the next 10 years because it’s locked into long-term contracts and also the price of gas is locked into oil.” Khelil is also president of the Orgganization of Petroleum Exporting Countries (OPEC).

The Moscow session of GECF fell short of representing all of the world’s leading gas exporters, since Brunei, Indonesia, Iraq, Malaysia, Turkmenistan, and the United Arab Emirates did not attend.

The top-3 gas producing countries in Moscow — Russia, Iran and Qatar — control an estimated 59% of global gas reserves; the missing group, including the US, which has shunned the GECF from the start, controls about 13%.

The ministers declined to publish the new GECF charter they have voted. Asked whether that would arouse suspicion on the part of gas-consuming countries, David Small from the Trinidad and Tobago delegation said: “They will be suspicious no matter what we do.”

Russian sources suggest that the charter obliges the gas producers to exchange production, investment, pipeline, and export information, in an effort to prevent, according to Russian energy minister Sergei Shmatko, “an unnecessary oversupply of gas in one region or another, which would undoubtedly end up putting pressure on prices.”

The ministers outvoted Russia’s proposal for St. Petersburg as the GECF headquarters, in favour of Doha (Qatar).

In a speech to the meeting, Prime Minister Vladimir Putin expressed the consensus view that, until the gas exporters shift fthe bulk of their exports from piped natural gas to liquified natural gas (LNG) by tanker, cartel limits on output to regulate the gas price are impossible. Putin encouraged the group to work towards that goal.

Russia will start shipping LNG from Sakhalin Island next year, primarily to Japan and South Korea. Negotiations are under way with China for future deliveries of natural gas and LNG from east Siberian projects yet to be built.

A significant policy strategy appears to have been quietly agreed by the GECF members, but missed by the media. This is to increase the power over gas supply and transportation by state-controlled energy companies, and relegate the well-known European and American oil companies, such as BP, Shell, Exxonmobil, and Chevron, to minority participation.”The exclusion of international [oil] majors from controlling major gas projects and their relegation to minority partnership roles is just as upsetting for western countries as the prospect of eventual price setting,” reports Uralsib Bank in Moscow.

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