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UPDATE 2-Venezuela's Chavez wants Turkmenistan in "gas OPEC"

Published: 07 Sep 2009 04:20:36 PST

* Chavez pushes "gas OPEC" idea in Central Asia

* Turkmenistan gives no response to prompting

(Recasts, adds quotes, background)

By Marat Gurt

ASHGABAT, Sept 7 (Reuters) - Venezuelan President Hugo Chavez on Monday urged Turkmenistan, holder of the world's fourth-largest gas reserves, to join efforts to create a global grouping of gas exporters that is opposed by Western consumers.

The grouping of 11 natural gas exporting countries, an extension of an informal body involving Russia, Iran and Qatar, has aroused concern in the United States and the European Union, who worry such an organisation could manipulate supply.

Past meetings of the Gas Exporting Countries' Forum (GECF) have prompted suggestions it could develop along the lines of the Organization of the Petroleum Exporting Countries (OPEC).

But a June gathering of ministers from the GECF, whose members control more than three-quarters of the world's gas reserves, yielded few collective ideas on how to tighten the market. [ID:nLU215729]

"Have you joined the gas OPEC?" Chavez asked Turkmen leader Kurbanguly Berdymukhamedov at a meeting in Turkmenistan capital.

When Berdymukhamedov replied that Turkmenistan had not, Chavez said: "Please join."

Berdymukhamedov gave no direct response.

Turkmenistan, which has enough reserves to supply the European Union's gas needs for 16 years, will play a crucial role in determining future gas flows to Western consumers.

Central Asia's largest gas producer, which has never commented on the "gas OPEC" idea, traditionally sells most of its gas via Russia's pipelines. Sales have been halted since a pipeline blast in April that Ashgabat says was Russia's fault.

The row has left Turkmenistan without much-needed hard currency earnings for months. The former Soviet republic, which also has a supply deal with Iran, has expressed interest in diversifying gas exports.

It plans to start pumping gas to China at the end of this year and is potentially a key supplier to the EU-backed Nabucco pipeline -- a route to European markets that would bypass Russia -- and a proposed pipeline through Afghanistan, Pakistan and India.

Berdymukhamedov visited Bulgaria last month with a view to securing a market for over 2 billion cubic metres per year of its gas. [ID:nLR733940]

"NEW HISTORY

"This visit is the beginning of new history," said Chavez, who travelled to Turkmenistan after a visit to Iran.

"We want to get closer to you; Venezuela and Turkmenistan, Latin America and Central Asia," added Chavez, who earlier signed a deal under which Iran and Venezuela will each invest $760 million in the other's energy sector. [ID:nSED737064]

Venezuela has the world's ninth largest gas reserves but produces little and exports almost nothing, so far, as most of it is used in the country's oil sector, according to the U.S. Energy Information Administration.

Russia has the world's biggest natural gas reserves, sitting on 43.30 trillion cubic metres (tcm) of gas, or 23.4 percent of the world's reserves, according to the BP Statistical Review.

Iran is second and Qatar third, while Turkmenistan is in fourth place by reserves, with 7.94 tcm, or 4.3 percent of the world's total, more than Saudi Arabia or the United States. Venezuela has 4.84 tcm, or 2.6 percent. [ID:nLN951614]

Iran has compared its grouping with Russia and Qatar to an OPEC-style body, though Moscow has been less eager to use such rhetoric in public.

Traders say a gas grouping with the influence of OPEC would be hard to create.

Most gas is delivered via pipelines under long-term contracts so influencing prices globally would be harder than with oil, which is sold on tankers to the highest bidder. (Writing by Guy Faulconbridge and Olzhas Auyezov, editing by Anthony Barker)


Source: Reuters

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