Posted by: Jack | April 30, 2008

“Gas OPEC” plan causes headaches for West

Governments of countries that export natural gas have been meeting in Tehran with a view to forming an organisation similar to OPEC.

In recent years the oil producers organisation has been revitalised and has helped member countries to get a better deal from the oil corporations (this process was pioneered by the revolutionary government of Venezuela.)

Now gas producers feel the time has come for them to get organised as well. As becomes more clear that the 21st century is going to be dominated by contests and wars over the control of natural resources such as oil, natural gas and fresh water, gas producers are realising that if they need to be prepared.

The idea was first proposed by ex-Russian President (now Prime Minister) Vladimir Putin. Russia has the world’s largest reserves of natural gas, and in recent years has been using them cannily as a way of putting pressure on Europe in the midst of disputes about the expansion of the EU and NATO, the Litvinenko murder and Chechnya.

Britain is particularly vulnerable, having been engaged in a feud with Russia ever since the murder of ex-KGB agent Alexander Litvinenko in London. The UK is right at the end of pipelines leading west from Russia.

The idea for a gas producers group was immediately backed by Iran, which has the world’s second biggest reserves. They have been meeting with the governments of Algeria, Venezuela, Qatar and Egypt informally since 2001 as the Gas Exporting Countries Forum (GECF). Now a two day conference in Tehran has met with a view to formalising an organisation.

The US in particular feels threatened by the move. The USA is currently largely self sufficient in natural gas, but its imports are predicted to rise sharply in coming years as its domestic supply runs out. Last year the House of Representatives unanimously passed a resolution condemning the new organisation.

Republican Rep. Ileana Ros-Lehtinen said: “At a time when American consumers are facing staggering increases in gasoline prices due in large part to the OPEC oil cartel, the United States cannot allow the creation of another global extortion racket, this time for natural gas. The establishment of a “gas OPEC” would constitute a major new threat to the security and to the economic well-being of the United States, our allies, and the world as a whole.

In addition to economic extortion, Iran and other U.S. opponents have openly stated their intent to use this cartel as an instrument for political purposes. If we are to prevent the rise of this new threat, we must develop a joint strategy with our allies and all countries that are importers of natural gas, including by diversifying sources and increasing access to international markets through construction of new pipelines.”

This statement points to a key issue for both the US and the gas producers-the siting and control of pipelines. The US has already been actively trying to control the resources and routes of distribution of fossil fuels to the emerging powers of Asia, primarily China. This is a major part of what lies at the heart of the wars in Iraq and Afghanistan, and the major expansion of US bases and influence in Central Asia.

China meanwhile has been building alliances of its own through the Shanghai Co Operation Organisation.

The move to build a formal relationship between gas producers has to be seen in this context. The US doesn’t want China, Russia or Iran and other countries with the capability of challenging their global co to have access to the natural resources they need, and if they do they want to control the pipelines.

And the gas exporters have their own tensions. Iran is trying to play Europe off against the US as it seeks to escape dependence on Russian gas. Meanwhile, Russia wants pipelines built to Asia to prevent Iran becoming a competitor in the European market.

The resource rich countries all realise that as fossil fuels dwindle and the world faces ecological collapse they are all targets, and they need to be organised. Following this conference it’s expected that the organisation will be formally launched in Moscow in June.

Meanwhile, the UK is facing even more frustration in its attempts to escape dependence on Russia. The UK government has been pouring investment into the complicated infrastructure required for Liquefied Natural Gas. To be kept in a liquid state natural gas requires expensive technology to keep it at temperature well below freezing.

However, shipments liquefied natural gas is traded openly on the world market to the highest bidder, and countries such as Japan and South Korea are far more dependent on them. Consequently they are more willing to pay a higher price. As a result the UK hasn’t had a delivery since January, increasing its dependence on Russian pipelines and its own dwindling supply in the North Sea.

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