Russia, Weaponizing Natural Gas

The National Post reports on Russia’s continuing efforts to weaponize its natural gas resources and use them to attack Western values rather than to advance the interests of the people of Russia:

Last year, CanWest News reported on reports the government of Saudi Arabia suggested Canada should consider joining the Organization of Petroleum Exporting Countries (OPEC), the much-reviled international oil cartel:  “Ali Al-Naimi, the Saudi oil minister, said…’If Canada decides on its own to join OPEC, what would we say? Of course it would be welcome,'” the report said. Needless to say, the Conservative government of Stephen Harper did not rush to submit membership papers on behalf of Canada — even though we are a budding “energy superpower,” according to the PM.
 
Now comes  word of the formation of a new league of energy-producing states — this time, with a natural gas focus.  Iran, Qatar and Russia — together representing about 60% of global natural gas reserves — announced on Tuesday that they are forming a “gas G3.”  The announcement came following a meeting in Tehran of top officials from the three countries.
 
According to Iranian reports, this natural gas G3 plans to create a financial information centre in Qatar, a centre of technical expertise in Iran and a centre for natural gas market studies in Russia. So far, Western reaction to this G3 concept is wary, but not overly alarmist.
 
A columnist in the London Times points out that the danger here isn’t of a second OPEC. Rather, Carl Mortished writes, “what we can expect, and what we ought to fear, is the exchange of information about prices, development schedules and investment plans” among Iran, Qatar and Russia.
 
That is, the more closely the G3 can coordinate their production to maximize the price of natural gas, the more they will be able to avoid the production in-fighting that has plagued OPEC’s efforts to keep oil prices high. OPEC finds it hard to keep all 13 member states in line when it comes to setting and keeping to oil production quotas. The G3, because of its smaller size, should find coordination of production much easier.
 
Should the West be worried about this gas G3? One thing to keep in mind is that post-Soviet Russia’s leaders have a habit of announcing impressive-sounding organizations that prove to do little to increase Moscow’s influence.
 
In 2002, for example, the Russians set up something called the “World Public Forum Dialogue of Civilizations.”  It holds an annual jamboree attended by second- and third-string non-governmental organizations, bureaucrats and elected officials.
 
The Forum’s main function is to provide Moscow with the chance to take clumsy propaganda pot-shots at the U.S. At this year’s meeting of the Dialogue, for example, a Russian representative called for the replacement of “the idea of uni-polar world [i.e., a U.S.-centric world] by the concept of dialogical community and agreement practices characteristic of polycentric world [where Russia has more say] in the state of globalization [sic].”
 
The Forum is thus little more than a latter-day version of old Soviet outfits like the unlamented Comintern or Cominform — except now the enemy is “the idea of uni-polar world” rather than “capitalist imperialism” or “fascist war-mongering.”
 
Similarly, in 2001, Russia joined hands with Tajikistan, Uzbekistan, Kazakhstan, Kyrgyzstan and China to form the Shanghai Cooperation Organization or SCO.
 
One British commentator  branded the SCO a  “dictator’s club” (none of its members are noted for democratic tendencies) and called it “a born-again Warsaw pact.”
 
So far, the SCO’s major accomplishment hasn’t taken to intimidating Warsaw Pact-style military exercises (although its members have held coordinated anti-terrorist training sessions.), restricting itself to holding meetings and issuing declarations attacking matters such as the “dangerous phantom of unipolar world [sic].”
 
With a record like this, the Russians will be patting themselves on the back if they can convince Qatar and Iran to issue a press release in the name of the gas G3 condemning all those who believe in “unfair unipolar pricing of natural gas by consumer [sic].”
 
How much power will the G3 actually hold over the price of natural gas? Less than you might think. As today’s Calgary Herald notes, the natural gas market is more structured than that of oil – consumers sign long-term contracts with producers, which keeps prices less volatile than in the oil market. This makes it hard to pull OPEC-style unilateral price hikes, analysts interviewed by the Herald point out.
 
Has Canada been asked to join this new natural gas club? Not yet, it appears. But we can make a solid case for inclusion, if we want to participate. According to Natural Resources Canada, “Canada is the third largest producer of natural gas in the world behind Russia and the United States.”  But since our relations with Russia and Iran are not very warm, it’s not likely we’ll be sending representatives to meetings of the G3 anytime soon.

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