Committee News

Monday, April 02, 2007

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Ros-Lehtinen Urges Bush Administration to Prevent Creation of Natural Gas Cartel

(WASHINGTON) – The world’s largest consumers of natural gas, including the United States and countries in Europe and Asia, must take decisive action to prevent leading gas exporters from creating a so-called “gas OPEC,” warned U.S. Rep. Ileana Ros-Lehtinen (R-FL) today in a letter to Secretary of State Condoleezza Rice.

The letter to Rice comes in advance of an April meeting in Doha, Qatar, of senior officials from Iran, Russia, Venezuela, Algeria, Qatar and other natural gas producers. Published reports suggest that an agreement to form a cartel may be announced at the Gas Exporting Countries Forum which begins April 9th.

On January 29th, Iranian Supreme Leader Ayatollah Khameinei proposed that Russia and Iran cooperate to establish a cartel for natural gas. Russian President Vladimir Putin has expressed interest, as has Venezuelan strongman Hugo Chavez, among others.

Iran’s leaders have made clear their interest in using this new tool for political purposes, a goal with which Chavez enthusiastically agrees and regards as an expansion of his ongoing effort to establish a similar cartel in Latin America.

“The creation of this cartel would pose a major and long-term threat to the world’s energy supply,” said Ros-Lehtinen, Ranking Republican on the House Foreign Affairs Committee. “We must vigorously oppose the establishment of this global extortion racket.”

The U.S. is largely self-sufficient in natural gas, but its imports are projected to rapidly increase over the next few years. Europe already reliant on Russia for almost half of its needs, will even be increasingly vulnerable over the next decade. Japan, South Korea, and other U.S. allies are heavily dependent on imported natural gas, while countries such as China and India are projected to rapidly increase their consumption.

In the letter to Rice, Ros-Lehtinen suggested that the United States:

Develop a joint strategy with its allies to vigorously oppose the creation of a cartel;
Underscore to Qatar, the host of the April meeting, that the United States cannot be expected to assist countries that are simultaneously participating in efforts that undermine U.S. security and also challenge its government to take a leading role in opposing the creation of any cartel;
Make clear to the Russian government that the United States would regard the establishment of a cartel as an unfriendly act that would negatively impact cooperation in other areas;
Focus increased attention on assisting countries in Central Asia, for example, to develop pipelines and other infrastructure that would free them from reliance on Russia, Iran, or others for their gas exports.
Text of the letter to Secretary Rice dated April 2, 2007:

On January 29 of this year, Iranian Supreme Leader Ayatollah Khamenei proposed that Russia and Iran cooperate to establish a cartel for natural gas that some have termed a “gas OPEC.” Russian President Putin has expressed great interest, as has Venezuelan strongman Hugo Chavez, among others. Various press reports have cited official sources in these and other countries confirming that an agreement is expected to be announced at the meeting of the Gas Exporting Countries Forum in Doha on April 9.

The creation of this cartel would pose a major and long-term threat to the world’s energy supply. Although the United States currently is largely self-sufficient in natural gas, its imports are projected to rapidly increase over the next few years. Europe already relies on Russia for almost half of its needs and will greatly increase its vulnerability over the next decade. Japan, South Korea, and other U.S. allies are heavily dependent on imported natural gas, while countries such as China and India are projected to rapidly increase their consumption.

The threat is not just to the world’s supply of energy and to the global economy. Iran’s leaders have made clear their interest in using this new tool for political purposes, a goal with which Chavez enthusiastically agrees and regards as an expansion of his ongoing effort to establish a similar cartel in Latin America.

As all are aware, Russia has already employed its supply of oil and gas to exert political pressure on Georgia, Ukraine, and Belarus, among other countries. NATO officials recently warned European leaders of the danger of their increasing dependence on Russian energy and of the prospect of alternative suppliers cooperating with Moscow. Last year, Algeria and Russia agreed to coordinate their policies regarding natural gas exports.

Although the establishment of such a cartel would not be easily accomplished in the short term, I believe it is essential that the U.S. make every effort to prevent this politically-driven threat to the world’s energy supply from being created.

We have several options. The first is to develop a joint strategy with our allies and all importing countries, one that extends beyond the upcoming meeting in Doha to include future attempts as well. We all share a common interest in this matter, regardless of our differences in other areas.

The rising threat from Iran to our allies and others in the Persian Gulf has resulted in increasing demands for a U.S. guarantee of their security. Qatar, the host for the April 9 meeting, is among these. It is a major exporter of natural gas and as such would be a key member of any cartel.

The U.S. must make clear that we would regard any move in this direction as an unfriendly act and that we cannot be expected to assist countries that are simultaneously participating in efforts that undermine our security. We must also persuade the other states in the region to use their influence to convince Qatar not only to refrain from joining such an effort but to actively work against its establishment by others.

Further, the U.S. must unambiguously convey to the Russian government that we would view the formation of a cartel as a deliberate threat to us and to our allies. There are a number of related areas where that point can be reinforced. As only one example, Moscow should be told that U.S. support for its ambition to market a range of nuclear services to the world should not be taken for granted.

In addition, we must increase our efforts to ensure that neither Russia nor any other country is able to dominate the export of gas from other countries, especially by pipeline. This has long been U.S. policy, most prominently regarding oil, but a new emphasis on gas is needed.

Central Asian nations offer an important opportunity. The lack of alternative routes to the world market has given Russia and Iran enormous leverage over the region’s exports. We must encourage the new government in Turkmenistan, for example, to end the isolation enforced by the former ruler and move quickly to establish new export routes, one such idea being a pipeline under the Caspian Sea.

Madam Secretary, we have the rare opportunity to preempt a new and dangerous threat from arising, rather than simply react to a fait accompli. If we are to deny enemies such as Iran and Venezuela yet another powerful weapon to use against us and our allies, we must act quickly and decisively, both publicly and behind the scenes, to make clear to all concerned that any movement to establish yet another menace to the world’s energy supplies will have sharply negative consequences for all of those involved.

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