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Gas cartel is not a workable idea, or a good one: IEA
Platts
London
Petroleumworld.com 02 15 06
The International Energy Association' deputy executive director
poured cold water on recent talk about creating a gas cartel, Wednesday.
Russian and Iranian government officials have this year discussed the
desirability of setting up a gas producers' cartel, mirrored perhaps along the
lines of OPEC, with varying degrees of enthusiasm although Algeria and Qatar
have been cooler on the idea. A meeting of the Gas Exporting Countries Forum,
which was set up some years ago but which has not acted in concert on gas
production, is expected to take place in Doha this April.
But such cartels seldom work, the IEA's William Ramsay told Platts
Wednesday. "While it is fine for producers of the same commodity to get
together and discuss business, with the result that they supply more as demand
grows, we don't necessarily think the talk about cartels does any good. It
affects prices and volatility in the commodity. If the chatter is meaningless
it doesn't serve any real purpose. A very large percentage of world gas is
currently produced and consumed in IEA countries so talk of a cartel does not
carry much weight," he said.
"Gas is not the same as oil. It has more substitutes over time and it is
less of a commodity. Most of it is consumed where it is produced. There is a
lot more rigidity in the market. It is hard to envisage how a cartel would
work, certainly with pipelines and LNG projects based on long term
commitments."
"For example, European markets are dominated by pipeline gas that is
priced according to long term contracts. Those prices may be high, but don't
fluctuate. With European LNG import/export contracts there is no real price
mechanism reflecting the market, so long-term prices remain steady."
"I would expect Iran to be a vocal supporter of the idea--it is a vocal
supporter of OPEC. But Iran is not soon a big gas exporter. By the time Iran
has exportable gas it may be a different country. Russian gas production is in
decline even though it has huge resources. Those resources will stay in the
ground and not be produced until they find a better formula to mobilize
investment," he said.
--William Powell, william_powell@platts.comFor simliar news, request a free trial to European Natural Gas Report at
http://www.platts.com/Request%20More%20Information/index.xml?src=story
Platts 14 02 07
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