Cheap gas era nearing end, warns Russian PM

The Gas Exporting Countries Forum, or GECF, groups Russia, the world's largest gas producer, with other gas-rich states, such as Iran and Qatar and 11 other gas-exporting countries.

In a keynote address at the forum's meeting, Putin said higher costs of exploration, production and transport meant the era of cheap gas prices was ending. "The expenses necessary for developing fields are rising sharply, and this means the era of cheap gas, is of course coming to an end," the Russian PM said.

Western countries have warned against forming a "gas OPEC" along the lines of the Organization of Petroleum Exporting Countries. Forum officials were at pains to emphasize that the purpose of the annual meeting was to finalize and approve a charter for the body rather than create a cartel to fix prices.

"The goal of the meeting is to transform it into a more organized format. We expect such a decision to be taken. This is a gas 'Non-OPEC'," said the deputy chairperson of Gazprom, Alexander Medvedev. "It's not a cartel. We are defending the interests of our countries, that's all," Venezuelan Energy Minister Rafael Ramirez said, reported Agence France-Presse.

Putin's comments came after Russia told Ukraine, which ships about four-fifths of the nation’s gas exports to Europe via its pipelines, that it would cut deliveries in the event of any payment failure for energy shipments in 2008. Russia shut off deliveries three years ago amid a price disagreement, and says its neighbor is withholding about $2 billion in payment for gas supplies.

Viktor Zubkov, chairperson of Gazprom, said that Ukraine should be held "fully responsible" for any disruption in Russian gas supplies to Europe, reported Bloomberg.