After OPEC, a gas cartel! Well, Putin is impressed

IIPM PUBLICATION

What was meant for all, actually fall into the hands of countries that behaved like corporations. First it was Organisation of Petroleum Exporting Countries (OPEC) world’s foremost recognised oil cartel; now a gas cartel appears to be in making, courtesy, Vladimir Putin’s Russia and Ahmadinejad’s Iran. The intentions of Vladimir Putin can be gauged from the act when recently Putin took the whole world by surprise by planting its flag on the ocean floor under the North Pole in a symbolic gesture to claim the rights to the sea-bed, which could be rich in oil and gas.

Russia happens to be a dominant player in the natural gas and a major supplier to many erstwhile USSR countries and other European countries. Russia’s state-controlled Gazprom exports natural gas to nine European countries. Russia has world’s largest proven natural gas and eight largest oil reserves. As such Russia has the ability to dictate gas prices and influence the natural gas supply, Russia turned off the natural gas tap to Ukraine and Moldovo in January 2006 and threatened to pull out the plug to Belarus and Georgia in late 2006 over price negotiations. The above examples not only damaged Russia’s image as a reliable energy provider, but also made it quite apparent that Russia is using gas a political tool to gain economic mileage.

A string of deals by Russia with other Central Asian countries like Kazakhstan, Turkmenistan & Uzbekistan indicates for a high probability of Russia along with countries mentioned above, along with Iran joining hands for a natural gas cartel. “A gas OPEC is an interesting idea,… our main aim is to co-ordinate our activities with an eye to the solution of the main goal of unconditionally and securely supplying the main consumers of energy resources,” Putin said in a Kremlin new conference. But past instances fail to prove Putin’s viewpoint, where Russia has used gas as a weapon to control its neighbours.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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