Moscow (Platts)--5Jun2008

Russia hopes later this year to set up an international gas producers'
think tank, which would advise national governments on gas policies and
pricing, but would not make any regulatory decisions, Oleg Zhilin, vice
president for Russian non-profit gas partnership Russian Gas Society, said
late Wednesday.

The alliance, dubbed the International Association of National
Non-Governmental Gas Organizations, may initially comprise one or two members
from the former Soviet Union, but its creation would eventually help respond
to the challenges posed by uniting gas consuming countries, Zhilin told
Platts.

"Gas-consuming counties are uniting and creating unilateral market rules,
while talking to gas producers individually," he said on the sidelines of a
meeting in Moscow which discussed the establishment of the organization.
For the balance, "gas producers should also clearly voice their demands
and proposals," Zhilin said.

IANNGO may also act as an information and analysis center, along the
lines of the International Energy Agency, Zhilin told the meeting.

Likewise, the organization may inherit some of the functions of Eurogas
in putting forward the gas producers' point of view with regulators and
developing recommendations for countries which would make up IANNGO, he said.
The organization would also discuss pricing issues, he said.

"We are asked: but then you could agree on the price? Of course! But it
does not mean that would be the actual price...it is up to the market," he
said.

Zhilin, however, denied the planned organization would resemble any
cartel or would take on some of the functions of the Gas Exporting Countries
Forum, a group of the largest gas producing nations.

IANNGO NOT A 'GAS OPEC' ALLIANCE

The GECF group, which includes Iran, Russia, Algeria, Bolivia, Brunei,
Venezuela, Egypt, Indonesia, Qatar, Libya, Malaysia, Nigeria, the UAE, Oman,
Trinidad and Tobago, and Equatorial Guinea, is expected to evolve into an
OPEC-like gas producers' alliance.

The GECF members are still working on the charter of the organization, as
reportedly there are several drafts. Russia's proposals do not mention the
creation of the new cartel and are "milder" than those put forward by Iran,
according to a Russian media report earlier this year. The GECF meeting in
Moscow, scheduled for June this year, has been postponed until October, as the
discussions on the future organization are continuing.

By contrast, Zhilin said, "We are not a state organization, but rather a
professional association."

"We cannot change the system...or make decisions. But we can send signals
to our governments," he said. He added that IANNGO would communicate with
GECF.

Russia has so far only advanced in talks with Belarus and Kazakhstan, two
of its closest allies in the CIS, on the establishment of IANNGO.
But even if it agrees with either of them, the organization can get off
ground, he said.

"We would like to have the organization this year. Even if it is only
comprised of two countries, it will be the first step. Others will join
later," he said.

The idea of IANNGO has been nurtured for several years, and Russia has
this year moved to speed up the process.

By September, the role, functions, budget and charter of the future union
should be agreed, Zhilin said.

Initially, the alliance would have an "insignificant" budget of Rb10-15
million/year ($420,000 to $630,000) with the financing structure to be
finalized, he said, adding that the union would count on support from the
budgets of the member states.

THINK TANK TO BE SET UP IN OCTOBER

Under the current schedule, the organization is to be established in
October.

The organization will be registered in Russia, but this should not be
viewed as a priority over the other members.

"The goal is an equal partnership of all members," Zhilin said.
Ukraine, a major gas transit country, is unlikely to join the union any
time soon due to unstable political situation in that country, he said.
Other gas producers, such as Turkmenistan and Iran, do not yet have
developed civil societies and public organizations of the gas industry
experts. But the talks will continue with all interested parties, he said.
--Anna Shiryaevskaya, anna_shiryaevskaya@platts.com