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Putin and Gaddafi discuss gas cartel

Business Materials 17 April 2008 15:49 (UTC +04:00)

(dpa) - Russian President Vladimir Putin, on one of his final foreign trips, will hold further talks on Thursday with Libyan President Moammer Gaddafi about the idea of building an organization of major natural gas producers.

Putin began his trip to Libya on Wednesday - one of his final foreign trip before the end of his presidential term on May 7. Later Thursday he will go to Italy.

Moscow seeks to strengthen cooperation with Tripoli in economic, scientific and oil and gas projects, Putin told Gaddafi.

Putin said he was pleased with the activities of Russian firms in oil explorations in Libya.

Russia's natural gas company Gazprom unveiled plans last week for joint gas projects in Libya with Italy's Eni.

There is growing concern in the West that Russia is seeking to build a gas cartel with major gas producers such as Libya, Algeria and Qatar, which would create a monopoly over gas production and prices.

The cartel would be similar to the Organization of Petroleum Exporting Countries OPEC.

Tripoli has already given an initial approval to Russia's idea.

"We support the idea of building an organization of gas-producing countries," Gaddafi said in a speech at a banquet he held for Putin on Wednesday.

Energy development and coordination between oil and gas producers are also on the agenda of talks.

The use of nuclear energy in non-military projects is an area of cooperation that the Libyan side is seeking to develop with Russia, Libyan Foreign Minister Abdel-Rahman Shalkam said.

Putin is seeking to revive ties with Libya, which had been a traditional ally of the former Soviet Union. Tripoli was a major arms purchaser of Soviet weapons.

Libya owes Russia some 4.6 billion dollars in debt, according to Russian Finance Minister Alexei Kudrin. The issue of unsettled debt is expected to be raised by Putin.

Despite a thaw in relations with the west, Gaddafi criticized what he called a "provocative and hostile" policy towards Moscow.

Critical of US international policy, Gaddafi said mutual deterrence was necessary to maintain world peace as "the rule of force replaced the rule of law."

"The policy of threatening the sovereignty of countries and provoking others needs to a deterrence," Gaddafi said.

"The unity of (former) Yugoslavia and the Russian Federation should have been respected. The independence of Iraq and Afghanistan should have been respected," Gaddafi said.

"There has been no world war since World War II because of nuclear deterrence. But in the absence of deterrence, the balance of power in the world is at risk," the Libyan leader noted.

Long accused by the West of sponsoring terrorism and suffering under international sanctions for years, Tripoli renounced terrorism and nuclear weapons in 2003.

This was followed by lifting of sanctions by Western governments in 2004.

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