Official Russia

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 the
spot market for around $180 on Wednesday, Mr. Cronshaw said.

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

Whatever
the group’s intentions, the positioning of an executive from a company
controlled by a member of the close coterie of bureaucrats and former
security service men with ties to Mr. Putin suggests the importance of
the group for Russia’s interests.

Source: Robert Amsterdam