By Oleg Shchedrov
MOSCOW, Feb 19 (Reuters) - Energy was high on the agenda of Russian President Vladimir Putin's meeting with Algerian leader Abdelaziz Bouteflika on Tuesday, but both men avoided mentioning the sensitive issue of an OPEC-style gas cartel.
"Algeria is the world's fourth gas exporter, Russia is also a major exporter," Putin told Bouteflika after a welcome hug ahead of the Kremlin talks.
"It is very important for us to be in contact on energy issues, especially now that Algeria is heading the OPEC."
Bouteflika flew to Moscow for the two-day visit with a group of ministers including current OPEC president Chakib Khelil, also Algeria's minister of energy and mines.
A growing warmth in ties between Algeria and Russia in the past few years has fuelled market and media speculation that the creation of an OPEC-style gas charter is in the pipeline.
President Vladimir Putin last year described the concept of a "gas OPEC" as an "interesting idea." Analysts have ruled out the possibility that such a grouping could move world prices to the same degree as OPEC because gas is much harder to transport and a world market in gas does not exist.
But the prospect of a "gas OPEC" has alarmed the European Union and the United States, which believe such an organisation will threaten global energy security.
Russia, the world's largest gas exporter, and Iran, Qatar, Venezuela, Nigeria and Algeria have said their annual gas forum -- which meets this year in Moscow in June -- aims to increase cooperation between key producers.
But Russian officials have consistently rejected any comparisons between the forum and a would-be "gas OPEC."
Neither Putin nor Bouteflika mentioned any plans to change the format at the Moscow forum.
"Our countries are linked by multilateral energy contacts, including the forum of gas exporters," Russian Energy Minister Viktor Khristenko told reporters after Putin and Bouteflika's talk. "We use all the opportunities we can to be in synch including today's visit by the Algerian president."
PROBLEMS
Talks between the two leaders have been tainted by Russian media reports this week that Algeria may return 15 MiG fighter jets it bought under a $7.5 billion arms deal it signed with Putin two years ago because of quality concerns.
Putin and Bouteflika said nothing about arms although Algeria is one of the world's top buyers of Russian weapons and a long-standing arms client.
But they exchanged a few remarks on a series of problems complicating bilateral ties.
"By 2012, Algeria and the European Union will create a free trade zone," Putin said. "We would not want to be left behind, in which case our firms could find themselves in a complicated situation," he added.
But the Algerian leader made clear that good relations with the European Union were paramount.
"When we started dialogue with the European Union, Morocco and Tunisia already had their own arrangement with them," he said. "We had to start knocking at every door to win similar agreements."
Bouteflika urged Russian firms, keen to get assets in Algeria, to follow the tactics used by Western partners.
"Russian companies still lack the understanding of what niches they could take," he told Putin after reiterating that Algeria was not planning to privatise its backbone enterprises.
"It could be more useful to strike partnership agreements," he added. "This is something we have with Western Europe, but not with Russia."
A cooperation deal set up last year between Russian gas export monopoly Gazprom and Algeria's state-owned energy firm Sonatrach fell apart at the end of last year when both sides backed out, declining to give a reason.
Khristenko said the project was not dead yet. "Gazprom and Sonatrach are now working on options to swap assets, take part in extracting and transporting gas," he said.
To see a related story, please click (Editing by James Jukwey)
