The Gas Cartel Czar

So the big news in energy politics today is that the Gas Exporting Countries Forum (GECF) has appointed a secretary general for the first time.  Guess what??  He’s Russian, and is employed at a company indirectly owned by Gennady Timchenko, and is close to Putin.  I wonder what will happen from here … just to recap, most analysts say that the gas OPEC is a ruse, in that the nature of natural gas distribution (via regional networks) doesn’t allow for price manipulation via production quotas, however it’s long been our argument that the goal of such an organization is to carve up the markets and reduce competition.  Here’s a good introduction to the new cartel czar from Andrew E. Kramer at the New York Times:

As a first order of business, Mr. Bokhanovsky commissioned a study on how to maintain the link between natural gas and oil prices in contracts, an idea opposed by the International Energy Agency, the organization that advises energy consuming countries.

If the group evolves into a cartel, much like the Organization of the Petroleum Exporting Countries is for crude oil, it could put the brakes on market forces making relatively clean-burning gas less expensive than oil today, Ian Cronshaw, an authority on natural gas at the I.E.A., said by telephone. “Our position is that markets should set prices,” he said.

Russian-supplied pipeline gas now costs about$280 for 1,000 cubic meters, while the same volume was selling on thespot market for around $180 on Wednesday, Mr. Cronshaw said.

Beforehis appointment, Mr. Bokhanovsky was a vice president at Stroytransgaz,a construction company indirectly controlled by Gennady Timchenko, anoil trader and ally of Prime Minister Vladimir V. Putin of Russia.

Whateverthe group’s intentions, the positioning of an executive from a companycontrolled by a member of the close coterie of bureaucrats and formersecurity service men with ties to Mr. Putin suggests the importance ofthe group for Russia’s interests.