Russian President Vladimir Putin called Monday on gas exporting countries to come up with a single pricing mechanism and resist EU competition rules as he hosted a summit with leaders from some of the world's top energy states. Putin received the likes of Venezuelan President Nicolas Maduro and Iran's outgoing leader Mahmoud Ahmadinejad for the Gas Exporting Countries Forum at the Kremlin's gilded halls.
The occasional series of GECF meetings are designed to group the natural gas producers into a tight-knit community of nations resembling the Opec oil cartel. Pressure on the bloc is mounting, in particular because of the extra gas supplies recently made available by North America's shale revolution. But important differences in how the two hydrocarbons are supplied to global clients and the more regional nature of gas distribution have kept the GECF countries from building particularly strong bonds.
The first gas summit was held amid much fanfare five years ago. Putin said it was time for those gathered to adopt a fresh approach because the excitement was fading due to a lack of results. "Our priority is to provide stable deliveries to global markets in the long-term perspective," Putin told the other leaders.
He said it was imperative they defend the practice of tying gas prices to those of oil and fighting the more temperamental nature of the spot market. Putin also defended long-term contracts that bind clients to purchase gas within a specific price range for a number of decades and which Russia has recently been forced to abandon under pressure from some European states.
EU nations in particular abhor the link between the price of oil and gas because of the expanding supplies of the latter that have come in recent years thanks to the booming liquefied natural gas (LNG) market. Shale gas production in North America has particularly redrawn the energy map. The United States in is no longer a perspective market for Russia's liquefied natural gas supplies from the from the Barents Sea.
Putin reiterated criticism of the European Union's Third Energy Package that bars companies such as Gazprom from owning both distribution pipelines and processing facilities in the same country. "The solidarity of exporting countries (in respect to the Third Energy Package) is imperative," Putin said. "We must jointly resist illegal pressure and more effectively defend the interests of gas producers and suppliers on international markets."