Putins Gas OPEC: the imminent monopoly

Author: Jared Fallon

“Regardless of whose property the natural resources and in particular the mineral resources might be, the state has the right to regulate the process of their development and use.” -Vladimir Putin

Current Russian Prime Minister Vladimir Putin realized Russia’s vast political influence potential in regards to energy long before the topic became widely discussed among the general public. Hailing from Leningrad State University Law with a strong emphasis in international affairs, Putin quickly discovered the role increasing energy demand matched with decreasing supplies will have on the future of the world’s major affairs and global markets. Some of the precedents for action Putin set forth in regards to Russia’s political affairs and Gazprom that are already beginning to show fruition. Russia now seeks to create an OPEC-like natural gas organization, an effort that would secure the world’s #1 natural gas supplier as the #1 natural gas  player immediately and deep into the foreseeable future.

Official announcements came shortly after current President (and former Chairman of Gazprom’s board of directors) Dmitry Medvedev hosted OPEC’s Secretary-General last week, securing plans for the Kremlin to coordinate oil efforts with the oil monopoly. The group would most likely include the owners of roughly 55% percent of the world’s known natural gas reserves – Russia, Iran, and Qatar – and may include coordination with countries such as Algeria, Indonesia, Libya, and Venezuela. Plans are expected to be finalized as early as November 18. These efforts are not new. According to Russian news sources the idea had been introduced long ago by no other than Mr. Putin himself.

Putin, pictured sporting his Judo gi in Japan, has been getting ready to kick ass outside the ring. This time his focus is in the area of natural gas and international monopolies. 

Back in 2007 Vladimir was quoted saying “A gas OPEC is an interesting idea. We will think about it” – shortly after denying western accusations of Russia’s use of energy as a lever to attain international political sway. The idea of the world’s second greatest oil reserve owner coordinating with OPEC is frightening enough, but to have a new international coalition outlet for the Kremlin’s natural gas might is even more chilling. This is especially true when considering Putin’s international law-justifying stance on such issues: “Russia’s modern foreign policy is based on the principles of pragmatism, predictability and the supremacy of international law.”

The situation becomes more significant when realizing Putin’s deeper, less rosy stance on such topics. “…the basic strategic tasks for the natural resource bloc involve achieving the transition to a rational combination of administrative and economic methods of government regulation in the sphere of resource exploitation”. The US will undoubtedly be frustrated in its world affairs if Russia begins to step up its natural gas exploitation beyond simply making threats of cutting off pipelines to Eastern Europe. If (and when?) a “gas OPEC” is created confrontation (diplomatic or otherwise) will eventually have to take place.

Presently, the US already has several pending proposals to hold various OPEC counties to laws such as the Sherman Act (S.2976), criticizing lack of competition as a basis. Other proposals go one step further (H.R.6074), seeking to amend the Sherman Anti-Trust Act to “make oil-producing and exporting cartels illegal,”. This stance will simply not be enough if America does in fact choose to extend the same line of thinking to Russian natural gas partnership activity, a Kremlin-admitted cornerstone to the rebuilding of the former Soviet’s crumbled economy. When money calls and natural gas is the realistic translation of both that and heavy international influence, the US will need more than a federal law to change Putin’s (and Medvedev’s ) mind. 

Current President Dmitry Medvedev (pictured left) with former President Vladimir Putin back in 2000. Putin served two terms, endorsed Gazprom Exec Medvedev, and then re-emerged on the political scene as Russia’s Prime Minister.

“In terms of a general conclusion it follows that existing socio-economic conditions, and also the strategy for Russia’s exit from the deep crisis and restoration of her former power on a qualitatively new basis demonstrate that conditions in the natural resource complex remain the most important factor in the state’s near-term development.”– Vladimir Putin