Friday, February 01, 2008

Gas-Exporting Nations Mull OPEC-Style Cartel

Gas-Exporting Nations Mull OPEC-Style Cartel
(The Times)

The world’s leading gas-producing nations will meet in Moscow in June to discuss the creation of an OPEC-style cartel.

Speaking at the World Economic Forum in Davos yesterday, Abdullah al-Attiyah, Qatar’s Energy Minister, said that at least 14 countries would attend the meeting of the Gas Exporting Countries Forum (GECF), an informal club whose members control more than 70 per cent of world gas reserves and 42 per cent of production.

Mr al-Attiyah said that the organisation, which was formed in 2001, had appointed experts to study the feasibility of forming a cartel on the lines of OPEC and a report on the findings would be produced at the meeting in Russia.

The prospect of a cartel for gas gained weight in 2006 when Europe’s two biggest suppliers, Gazprom, of Russia, and Sonatrach, of Algeria, signed a partnership deal. Their relationship has since cooled, although President Putin said last year that a gas OPEC was “an interesting idea”. Nevertheless, the concept has alarmed Western importer countries that rely heavily on gas for heating and electricity.

With the dwindling of reserves from the North Sea, the UK, for example, is importing more and more gas. Before 2004 it was self-sufficient, but this year up to 25 per cent of its overall supplies will be imported and that is expected to reach 75 per cent by 2015.

There is currently no co-ordination of prices in the global gas market. Prices for long-term supply contracts are agreed directly between producers and consumers.

However, Richard Savage, head of energy research at Mirabaud, the financial services group, said that the creation of such a cartel could backfire for producers. “It would be hugely worrying for consumers and a big incentive for them to look at alternative energy technologies,’’ he said.

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