It is noteworthy that the above-mentioned countries control 55% of the world's known gas reserves. Thus, the share of Russia, which is at the top of the world's gas reserves, accounts for about 30% or up to 48 trillion cubic meters of gas, Iran, located on the second the place has 23 trillion cubic meters, while Qatar owns 11 trillion cubic meters. Together, these three countries occupy a central position in natural gas sales in the world market. The initiative to establish a "gas OPEC" was negatively admitted by western countries, the main consumers of natural gas. These countries have already demonstrated their concern about the possible impact on the adjustment of supply and price for natural gas.        The reason of that, these states strongly dependent on imported gas, having a bad experience from the past, when member countries of OPEC oil increased the price for oil several times and used it as an instrument of pressure. But in this case the question is to consider how much gas OPEC will be able to influence on the policy and economy in the international arena? There is no doubt that more than half the world's gas deposits are concentrated in three countries, enables them to a certain extent, to use their prior condition.

It is noteworthy that, unlike oil, gas does not have its own market and the prices it determined not by supply and demand, but through long-term contracts between producers and consumers. The most interesting is that Russia, without this possible cartel is already the determinant of world prices for natural gas. The price of natural gas for European consumers, which eventually becoming the world price for this energy source, actually announced by Russian gas monopolist Gazprom. In particular, Gazprom has announced that in 2009 the price of natural gas could increase up to 500 $. Therefore, the establishment of an international cartel to determine the price of natural gas will not be crucial target for these countries. Besides neither Iran nor Qatar are not complementary sides which are able to determine the price of natural gas to Europe.

Thus, despite its huge deposits, Iran is unable to produce their own gas. The case came to the fact that Iran is sometimes unable to provide domestic needs and even suspended the supply of gas from Turkmenistan to Turkey on its territory in the winter of 2008, in order to use gas on its market. That it did not have the necessary financial resources. Regarding the possibility of attracting foreign capital, she is faced with the conduct of the USA sanctions on foreign companies that will seek to develop relations with Iran.

With respect to Qatar, the country is more interested in production and implementation of liquefied natural gas. In particular, the country has already announced its intention to increase the production of LNG three times. After that, Qatar will become the world leader in the production of this product. As can be seen from this intention, Russia and Qatar will be exporting two different products, and thus the prices are in no way can be determined together.

Referring to those countries' ability to use its advantage as the pressure on Western countries, as in their time did the oil OPEC, I think primarily it will be disadvantageous countries themselves. First of all revenues from oil and gas are central to these three countries, and therefore a possible escalation in the relationship regarding the supply of natural gas to Western markets may turn boomerang against them. It is also worth noting that the contract for the supply of natural gas signed long-term, and each of these countries has lots responsibilities for the supply of natural gas and they are unable to change contracts. If it can be possible to use gas as privilege factor in the future, it may push the West, the most stable consumers of gas, to seek alternative sources and an alternative to the gas, as happened in 1973 when OPEC increased oil prices from 3 dollars USA dollars per barrel up to 12 dollars USA.

In this case, one of the alternatives will supply natural gas from the Caspian region. The event can only accelerate the implementation of the project for the construction of Nabucco pipeline. Moreover, recently the British company Gaffney, Cline & Associates, which conducted the audit on the availability of natural gas reserves in the southern oil fields Eloten-Osman and Yashar located in Amudarya basin in eastern Turkmenistan. Thus, the results of the audit revealed that the most pessimistic estimate gas reserves in the fields of Southern Eloten-Othman are 4 trillion cubic meters, and the optimistic 14 trillion cubic meters. The results of the audit showed that deposits of natural gas reserves are many times higher than in largest Turkmen field Dovletabad. Apparently, this fact could play into the hands of European consumers, and Turkmenistan, which Russia is seeking alternative ways to transit its own gas to European markets. Besides, Azerbaijan is another alternative, which owns the closest to the European market deposit Shahdeniz and alternative transport through the pipeline Baku-Tbilisi-Erzurum gas pipeline. In light of these circumstances, one can conclude that the initiative of three states with the aim of creating a gas OPEC is not justified and will only have a psychological effect, without any serious consequences for international politics and economy.

Rovshan Ibrahimov, PhD

31 October 2008

rovsen@azerimal.net