Key gas exporting countries on Wednesday backed a Russian engineering executive, Leonid Bokhanovsky, to lead their efforts to control gas supplies on the global market, a sign that they recognize Moscow’s primary role in the plan.
Bokhanovsky, first vice president of engineering company Stroitransgaz, will run the Gas Exporting Countries Forum for two years with an option to stay over for another term, an Energy Ministry source said. Ministers from the forum’s member countries unanimously voted to appoint him secretary general at a meeting in Doha, Qatar, after Energy Minister Sergei Shmatko held a number of bilateral consultations, the Energy Ministry said in a statement.
Russia, Iran, Qatar and eight other gas-rich nations turned what was a loose grouping into a formal organization at a meeting in Moscow last December. As one of its goals, the forum will seek to prevent oversupplies of gas on regional markets in an effort to head off downward pressure on prices — a prospect that has raised concerns of cartel-like price fixing in consumer countries.
Bokhanovsky’s election comes after St. Petersburg lost a bid to host the group’s headquarters to Doha last December, even after Prime Minister Vladimir Putin promised that Russia would foot the office’s maintenance bills. Iran and Qatar have reportedly nominated candidates to the post as well.
The choice of a Russian candidate is recognition of the leading role that the world’s biggest gas exporter played in the formation of the forum, said Sergei Pravosudov, director of the National Energy Institute, a think tank. Gazprom, a monopoly gas exporter, plans to capture a greater share of the market in the United States and Asia, which puts Russia at the forefront of efforts to establish better communication with other suppliers, he said.
Iran’s chances to capture the post were weak because of its defiant stance toward Western nations over its nuclear program, which many suspect may be used to produce weapons rather than energy, Pravosudov said. An Iranian at the helm of the gas group would cast it in a confrontational light, he said.
“Russia is supposed to lead the way without conflicts,” he said.
Bokhanovsky’s duties will include putting together the forum’s budget and agenda and overseeing the execution of decisions made by the group’s primary governing body, the summits of energy ministers from member countries, a government source said. He will report to the gas forum’s executive council, which will be composed of representatives from each country, the source said.
Bokhanovsky, who has been in charge of Stroitransgaz’s overseas contracts, said he would work to turn the forum into a “leading advisory agency” for both gas producing and consuming countries, major gas companies and other international organizations, Stroitransgaz said in a statement from Qatar.
The forum will develop its own research team; promote new technology for gas exploration, production and transportation; monitor and forecast supply and demand; coordinate gas shipments through pipelines and by tankers; study the relation between gas and other energy resources; and promote the growth of global gas consumption, Bokhanovsky said.
His first priority will be to hammer out an agenda for 2010 to 2013, he said.
The group, which cumulatively accounts for almost 45 percent of global gas exports, is facing the first drop in demand for the fuel this year and an increase in production of shale gas by the United States, which prompted most industry observers to predict a glut on the market in the next few years.
Any future agreements on divvying up regional markets may help prevent uncomfortably competitive situations. A surge in shipments of liquefied natural gas from Qatar this year caused Gazprom’s exports to the same market to drop sharply because its gas was more expensive. Qatar exported 5.8 billion cubic meters of gas to Europe and Turkey over the first seven months of the year, up from 4 bcm in the same period last year, the International Energy Agency said.
“The goal of this organization is to divide the markets,” Pravosudov said. “The scariest thing for the gas producers is a glut.”
Members may push for Iran to direct future output to India, in an effort to alleviate competition on the European market, he said. Iran is now a net importer.
Gazprom is willing to take part in the construction of a pipeline to take Iranian gas to India, the Iranian Oil Minister’s special representative for the project, Hojjatollah Qanimifard, said last week, Iran’s Fars news agency reported. Shmatko discussed the prospect during his visit to Tehran last week, the Iranian official said.
Bokhanovsky, 51, has overseen work by Stroitransgaz to construct pipelines in countries such as India, Syria and Algeria since 2001. He had been a banker prior to that. As a student, he majored in international relations.
Other members of the gas forum are Algeria, Bolivia, Egypt, Equatorial Guinea, Libya, Nigeria, Trinidad and Tobago and Venezuela. Norway and Kazakhstan have observer status. The Netherlands and the United Arab Emirates also accepted invitations to attend the meeting.
Bokhanovsky said at the meeting that he viewed Azerbaijan, Uzbekistan, Turkmenistan, Canada, Australia and Latin American countries as potential members.