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» 08.06.2010 - Difficult Algeria-EU ties may deepen
» 20.04.2010 - Joint Sahara forces to fight terrorism
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Politics | Economy - Development

Algeria keen on establishing "Gas OPEC"

afrol News, 27 March - Algeria, together with Russia, seriously has started looking into the prospects of establishing a cartel of the world's major producers of natural gas, a parallel to the oil cartel OPEC. Main gas producing nations are to meet in the Qatari capital, Doha, on 9 April to discuss the idea.

OPEC, the Organisation of Petroleum Exporting Countries, for decades has been able to strongly influence world market prices of oil by a quota system. Oil production and prices have even at occasions been used as political pressure by OPEC, a cartel that only recently saw Angola and Sudan joining the block.

The idea of a "Gas OPEC" has been discussed for a long time, but so far has found no political interest among the world's biggest players. Leading gas exporter Russia - which also is a major oil producer - has not even joined OPEC. Arguments countering a gas cartel have included the limited range of gas exports, which normally goes from producer to consumer through a pipeline. Markets are therefore unconnected and exporters and importers are more interdependent than in the oil market.

But the natural gas market has become increasingly important and global, and the major players have shown a growing willingness of using exports as a political card. Russia recently used gas supplies and prices to blackmail the former Soviet republics of Georgia, Ukraine and Byelorussia, leading Moscow into a diplomatic crisis with the European Union (EU), its main customer.

Even Algeria during the last few months has shown its willingness to flex its economic muzzles with Spain over the Western Sahara conflict. Algeria is the main gas supplier to south-western Europe, accounting for 10 percent of the EU's gas imports.

Russia - totalling 25 percent of EU gas imports - is dominant on the Union's central and eastern flank. The northwest is dominated by natural gas production in the North Sea, by Norway and EU countries. Other parts of Mediterranean Europe import gas from Libya, Tunisia and Egypt - all potential members of a "Gas OPEC". Further, there are plans to connect Iran's vast gas production to Turkey and south-eastern Europe via new pipelines. Iran, together with Algeria and Russia, are the keenest supporters of a gas cartel.

Indeed, the current situation has caused greater conflict between producers and markets. Russia's and Algeria's muzzling of EU members has made the European intensify their look for other gas suppliers to lessen their economic - and thus political - dependence on current suppliers. Analysts hold that these moves by the EU have reawakened old schemes to create a gas cartel, which would unite powers to keep markets dependent on producers.

Iranian leader Ayatollah Ali Khamenei recently told the press he strongly favoured a cartel that included at least his country and Russia, which he claimed controlled about half of the world's natural gas reserves. Going increasingly on distance to Iran, Russia however has preferred to develop the possible cartel with Algeria. Algerian President Abdelaziz Bouteflika and Russian President Vladimir Putin recently formalised a gas cooperation between the two states and expressed interest in a gas cartel.

European analysts however downplay these plans. Hakim Darbouche of the Centre of European Policy Studies (CEPS), in a recent publication concludes that Russia-Algerian co-operation appear "to be a move aimed at coordinating not just their upstream activities but also the downstream, including controlling gas prices and volumes." However, he believes that the "relationship between Russia-Algeria-EU shows that a gas cartel is an unlikely eventuality."

Also Algerian Energy Minister Chakib Khelil last week downplayed the possibilities of creating a "Gas OPEC". While he admitted that the Algiers government was considering the thought, he emphasised that the major gas markets, such as the EU has reacted very negatively to the concept and that Algeria by no means wanted to create doubts in Europe over its reliability as an energy supplier.

Nevertheless, EU officials have already expressed "concern" about the aims of the Doha meeting of gas exporting countries. A cartel that at first would bring together Russia, Iran, Algeria, Qatar and Venezuela would control over 70 percent of the world's gas production. And it would be met with hostility from major markets, EU reactions indicate.

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