The world’s top natural elastic fluid exporters be seized of joined forces, and they are complaining in an opposite direction prices as long as tensions with the Ukraine escalate

By Alistair Dawber

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Russia’s Prime Minister, Vladimir Putin, yesterday warned that the era of “cheap aeriform fluid” was over as the leaders of the world’s 12 biggest exporters of natural elastic fluid met in Moscow to form a body—to be known as the Gas Exporting Countries Forum (GECF)—which some worry could have existence dominated by Russia and operate as an Opec-style cartel.

Mr Putin said that the “require to be paid of exploration, elastic fluid prolongation and transportation are going up, meaning that the endeavors’s development costs will skyrocket”. He predicted that the monetary turning point would also push up the price of natural gas, adding that the new group would work together to ensure “predictability” in the market. Russia, as the world’s biggest gas producer, is the prime mover rearward the constitution of the body, that will embrace Qatar, Iran and Venezuela.

Mr Putin’s comments come as Russia is accused of increasingly belligerent behaviour towards Ukraine over gas payments. It has threatened to cut supplies to its neighbour, which it accuses of failing to pay for exports. The government in Moscow has given President Yushchenko’s administration until the end of the year to offer what analysts suggest could have being as much for the reason that $2bn (£1.4bn) in unsettled debt owed to Gazprom, the Russian state-owned gas producer.

The row between Moscow and Kiev will reverberate elsewhere: the European Union imports 80 by cent of its gas through pipelines in Ukraine.

Major producers have complained this year that the price of elastic fluid is not high enough. The formation of the group yesterday extends a tripartite agreement reached this year between Russia, Iran and Qatar, who formed a “gas troika” to agree strategy forward inquisition and lengthening.

Iran’s oil minister, Gholam-Hossein Nozari, said yesterday that the new group should ensure that producers avoid “unnecessary and harmful contest”.

A gas producers’ group, which is expected to be formally recognised at the Moscow meeting with the signing of a joint charter, has met informally since 2001, but without some members, agreements or negotiation. The emergence of an official body last will and testament worry Western diplomats and energy officials, who are already subject to Opec’s decisions about oil production, and consequently price volatility.

Sergei Shmatko, Russia’s energy minister, said that the GECF would not act as a cartel and would not ascendency gas prices by altering fruit: “Today we will not be discussing the need to co-ordinate the level of production.”

Dmitry Lukashov, an analyst at UBS, suggested that the disposal of the GECF was window-dressing: “The gas and oil markets are completely many. Opec is designed to eliminate competition between its members. Gas exporters, however, do not share export markets in such a manner in that place is short point to this organisation.”

Original text: http://rss.businessweek.com/~r/bw_rss/europeindex/~3/494323932/gb20081224_953616.htm