A "gas OPEC" is not likely to be given birth during the
Qatar-host Gas Exporting Countries Forum (GECF) starting in Doha
from Monday, though discussions of such a cartel seem to be on top
agenda of the meeting.
As an informal meeting of 16 gas producers, the GECF has caused
great concerns among gas consumers all over the world for the
alleged new cartel.
The GECF gas producers, including Russia, Iran, Qatar, Venezuela
and Algeria, control 73 percent of the world's total gas reserves
and 42 percent of gas production.
Though GECF has been intending to control gas market, there are
several key factors against its development into a cartel
resembling the Organization of Petroleum Exporting Countries
(OPEC).
One of the reasons goes to pricing. Until now most natural gas
trade in the world are shipped by pipelines and under contracts as
long as 15 to 20 years, thereby sheltering from potential
fluctuations in gas prices, whether set by a cartel or not.
Liquified natural gas industry, which can barrel and sell gas
abroad, has been growing pressure to reduce the contract terms.
However, "that's not going to change overnight, so the pricing
impact is limited," Sara Banazak, a senior economist at the
American Petroleum Institute, told a US media.
The second factor goes to that gas is substitutable. Unlike oil
trading, the global market for natural gas, mainly heating and
generating electricity, is too fractured, which can be substituted
by coal, nuclear sources as well as green fuel.
Major gas producers and large economies hold opposition against
forming a cartel in this industry.
On Friday, Russian Minister of Industry and Energy Viktor
Khristenko told local media that global gas market will not be
formed within 10 to 15 years from now and a gas organization like
OPEC will not be created until then.
Khristenko, whose country sits on the largest natural gas
reserves in the world, criticized that the statements by several
Western countries about the forthcoming formation of a "club of gas
exporters" were "destructive and senseless."
Qatar, an OPEC member which holds the third-largest natural gas
reserves in the world, has also been lukewarm towards the idea. Its
Energy Minister Abdallah ben Hamad al-Attiyah said his country
would examine the proposal to create a cartel and would see how the
idea was received by other delegates.
More explicitly, Ibrahim al-Ibrahim, economic counselor to the
Qatari Emir, said his country does not want an organization like
OPEC, saying the forthcoming Doha forum will be focused on
coordinating contractual conditions between exporting countries and
maintaining a dialogue with importers.
Iran and Venezuela, two of the loudest voices in favor of the
gas cartel, have little heft in the market.
According to media reports, Iran's gas output has been mitigated
by a surge in domestic consumption, infrastructure problems and US
sanctions against its exports. Because of these factors, Iran is
already a net importer of natural gas. Venezuela is also likely to
be a net importer within a few years.
Meanwhile, major gas consumers in the world, the United States
and European Union, have all voiced opposition towards a "gas
OPEC." European leader have said they would stand against any
efforts to set up it since Western Europe is quite vulnerable to
fluctuations in supply piped from Russia and Algeria.
Nevertheless, in order to take more control over the pricing
upon a booming gas market, the gas producing countries will
undoubtedly produce some forms of cooperation in the coming Doha
meeting, observers here said.
(Xinhua News Agency April 9, 2007)
