Russia President Vladimir Putin Monday urged natural gas exporting
countries to join forces and defend traditional long-term oil-linked gas
contracts in the face of the growing popularity of spot pricing.
Speaking at a meeting of the Gas Exporting Countries Forum,
which covers the world's 11 leading gas producers, Mr. Putin said
"abandoning basis principles in long-term gas contracts may undermine
the energy security of gas importers." He added that the recent
development of the gas market increased supply on the spot market for
gas, but said it is "not a reason for rejecting long-term contracts, or
take-or-pay principles."
Russia, which covers about a quarter of Europe's gas needs through long-term pipeline
contracts, is trying to unite the loose group of gas producers in the
face of North America's shale gas boom and a rise of the liquefied
natural gas production.
With more natural gas produced in the U.S., more of Qatar's
LNG, which had been destined for North America, is being sent to Europe,
Russia's main export market.
As a result Russia's gas monopoly OAO Gazprom is
under pressure from its customers to amend existing long-term contracts,
which tie gas price to oil price and are based on "take-or-pay"
principle.
The forum was set up with the intention of creating a
gas-sector version of the Organization of the Petroleum Exporting
Countries, but this plan has yet to be realized.