Putin says gas OPEC idea is "interesting"

MOSCOW, Feb 1 (Reuters) Russian President Vladimir Putin said the concept of forming a group of gas producing countries was interesting but he did not want to see a cartel like the OPEC group of oil producers.

Any suggestion Moscow could participate in a gas exporter's group is deeply worrying to the European Union, which takes about a quarter of its supplies from Russia and has been keen to diversify its sources.

''A gas OPEC is an interesting idea,'' Putin said today at his annual news conference in the Kremlin, days after Iranian Supreme Leader Ayatollah Ali Khamenei publicly floated the possibility.

''In the first place we agree with the Iranian specialists and partners in some other countries that are big gas producers.

''We are trying to coordinate our efforts in third country markets. We do not intend to set up a cartel but we will continue to coordinate our activities, bearing in mind the key goal of serving the energy security of our customers.'' Iran state television quoted Khamenei as saying on Monday: ''Iran and Russia can establish the structure for an organisation of gas cooperation like OPEC as half of the world's gas reserves are in Russia and Iran.'' ALGERIA DEAL Putin visited Algeria last month and presided over the signing of a cooperation agreement between Russian gas monopoly Gazprom and Algerian state energy firm Sonatrach, the top and third largest gas suppliers to the European Union.

The visit triggered accusations that Russia and Algeria were seeking to corner the European market for gas, which will rely increasingly on imports as North Sea production declines.

EU Energy Commissioner Andris Piebalgs called for an explanation from the two countries since they could use their 35 percent market share to exploit their position through a partnership deal that could lead to price-fixing.

Analysts say fears of an attempt to fix the market are overblown, especially because the market's long-term contracts and a lack of liquidity and transparency would make coordination of gas supplies difficult.

Russia and Iran are members of the Gas Exporting Countries Forum (GECF), launched by Tehran in 2001, a talking shop for the world's top gas producers. Major gas players Algeria, Nigeria, and Qatar also belong.

Since its creation, the group has strenuously denied it aspires to become the gas world's equivalent of the Organization of the Petroleum Exporting Countries.

Later this month Putin will visit Saudi Arabia, which has bigger oil reserves but less gas than Russia, and which is the mainstay of OPEC.

Russia and Iran are the world's top and third largest holders of gas reserves respectively. Iran's reserves are estimated at 940 trillion cubic feet or more and Russia's are estimated at between 1,680 trillion and 2,360 trillion cubic feet.

World reserves are estimated by industry experts at between 6,100 trillion and 7,000 trillion cubic feet.

REUTERS AKJ PM1833