RIYADH, Sept 1: The decision, to form an energy club by Shanghai Cooperation Organisation in August, which claims at least a fifth of the global known energy resources, was received with a mix of interest, alarm and anxiety in the major western capitals.

Concerns are now being expressed that a gas analogue of Opec may ultimately appear in the East. SCO oil resources may not be very significant, even with Iran, which has observer status within the organisation, as they do not exceed 20 per cent of the world’s total.

The situation with gas is different. The reserves of Russia, the Central Asian states, and Iran make up for more than 50 per cent of the global proven gas reserves. Iran’s proposal to determine gas prices and principal transportation routes together with Russia is only adding oil to the flame.

SCO leaders at their Bishkek meeting underlined the need to create a “unified energy market,” sending alarm waves all around. The objective behind the initiative was ‘to bring energy resources from member countries rich in oil and natural gas to those that need such resources to promote their development. It also provides for exporting gas and oil to other world markets.

Russian President Vladimir Putin had lobbied hard for such an agreement ahead of the summit, saying that greater energy cooperation would be “a powerful impetus to regional projects in the interests of all SCO member states.

Although Iran still enjoys only an observer’s status within the SCO, the Iranian President Ahmadinejad, seizing on the agreement, formally pledged Tehran’s help in organising a meeting of SCO oil and gas ministers.

This is a changed scenario from the 1990s, when western energy companies had few rivals entering the region and signing big development contracts, under their own terms and conditions. With the United States emerging as the sole global super power, a weakened Russia, shattered by the collapse of the Soviet Union looked on impotently, though anxiously, as American officials and oilmen strutted around its former backyard.

The scenario is much more complex today. Russia is much more assertive today. Caspian reserves are proving to be more expensive to develop. Central Asian energy exporters, led by Kazakhstan, have grown richer – and more assertive – in dealing. Competition has multiplied, with China and India also scurrying to secure energy supplies from the Caspian belt.

In the meantime, Russia, Kazakhstan and Turkmenistan have also agreed to renovate and expand the region’s Soviet-era gas pipelines, allowing Russia keep its grip on exports to Europe. This may also undermine the much discussed Nabucco – the US and EU backed project for a pipeline from the region to Europe, including a stretch under the Caspian Sea, circumventing Russia.

On the other hand Beijing has also announced pipeline plans, with Turkmen and Kazakh support, to bring gas to China.

Almost simultaneously, Kazakhstan, apparently taking a cue from Moscow, earlier the week threatened to revoke the concession granted to the Italian Eni for its Kashagan offshore oilfield, citing environmental concerns.

The resources of Central Asia are a major prize in the global energy jigsaw. With the urge to dominate the world on imperial lines prevailing in Washington, Moscow no more appears ready to act spectator.