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Russia entices Qatar for natural gas cartel

Section: Daily Dispatches

By Donna Abu-Nasr and Jim Krane
Associated Press
via Yahoo News
Monday, February 12, 2007;_ylt=AsdM...

RIYADH, Saudi Arabia -- Russian President Vladimir Putin appeared to find quick success on a historic Mideast tour that saw the leader of energy-rich Russia forging oil diplomacy in Saudi Arabia and backing a natural gas cartel Monday with neighboring Qatar.

Putin's Middle East tour comes as Washington's stature in the Gulf is slipping and Arab monarchies are busy boosting ties outside the region, particularly in Asia. Both Qatar and Saudi Arabia have welcomed Putin despite being traditional U.S. allies.

Putin and Qatari Emir Sheik Hamad bin Khalifa Al Thani announced they would explore the creation of a natural gas cartel to represent the interests of producer countries to influence the global market.

"We do not reject the idea of creating a gas cartel," Putin said just hours after arriving in the tiny Gulf state after his two-day Saudi visit. "But this initiative requires more study."

Putin also said he planned to host a Mideast peace conference but gave no details.

European Union leaders have said they would stand against any effort by Russia to create a gas cartel, fearing energy prices — and Russia's political clout — could rise dramatically as a result. Europe gets 44 percent of its natural gas imports from Russia.

Putin said he would send a team of experts to a natural gas conference being held in Doha in April, where they would discuss details of building a cartel resembling the Organization of Petroleum Exporting Countries. Qatar is an OPEC member but Russia is not.

Russia and Qatar are two of the world's largest producers of natural gas, and tiny Qatar sits atop the world's single largest gas field.

In January, gas-rich Iran said it favored forming a cartel with Russia. But at the time, the head of Russia's Security Council, Igor Ivanov, said there were no plans for a cartel, only "interest in gas producers coordinating their policies in the gas sphere."

Sheik Hamad said he supported cartel talks but was unsure whether a gas cartel would be able to command OPEC-style control over gas contracts, which are typically arranged on terms as long as 25 years.

In Riyadh on Monday, Putin said he had found "common ground" between Russia and Saudi Arabia, where Saudi and Russian business leaders appeared to strengthen investment and political ties.

"Russia and Saudi Arabia are the world's leading energy producers and exporters and here it is easy for us to find common ground," Putin said in remarks in Saudi Arabia broadcast on Russian state television.

Russia, the world's second-largest oil exporter behind Saudi Arabia, represents a potential ally with considerable political strength as a member of the U.N. Security Council and the so-called Quartet of Middle East peace mediators.

Connecticut-sized Qatar is home to a pair of large U.S. military bases, one of which houses the U.S. command post for operations in Iraq and Afghanistan. The Qatari government also owns the Al-Jazeera TV network.

Qatar Petroleum, the country's state-owned energy company, also signed a memorandum of understanding with Russia's OAO Lukoil, Sheik Hamad said without giving details. He said Russia and Qatar also discussed further ties in the field of energy, metallurgy, technology and science.

Putin said Lukoil was ready to invest $2 billion in developing Saudi gas fields.

Relations between Russia and Arab countries appear to be getting a boost from the souring of ties between Washington and much of the Arab world after the Sept. 11, 2001 attacks.

The friendship between Russia and the U.S. has also been stressed by disagreements over an array of international issues including U.S. criticism of Russia's record on democracy under Putin.

Before his arrival in Saudi Arabia, Putin leveled his harshest criticism yet of the former Cold War foe, saying it had "overstepped its national borders in every way" and is fostering "a new global arms race." U.S. Secretary Robert Gates responded Sunday by saying "one Cold War is enough" and that he would go to Moscow to try to reduce tensions.

Earlier Monday, Putin met with about 200 Saudi and Russian businessmen eager to expand ties. Saudi Arabian firms have been seeking deals in countries other than the United States because of the difficulty in getting visas following the Sept. 11 attacks. The hijackings were carried out by 19 Arabs, including 15 Saudis.

Direct investment between Saudi and Russia remains low, but trade increased from $88.5 million in 1999 to $412 million in 2005.

Putin was received Monday night in Jordan by its monarch, King Abdullah II. The Jordanian government has said it hoped that Russia would help restart Israeli-Palestinian peacemaking.

"Russia is an important member of the Quartet and a country that has every interest in seeing a revival of the peace process and a permanent peace settlement in the Middle East," said chief government spokesman Nasser Judeh, referring to the Mideast peace mediators, who also include the United States, Europe and the United Nations. "It's a very important and welcomed visit."

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