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Gas exporters mull enhancing forum but cartel still distant
By Omar Hasan
AFP
DOHA
Petroleumworld.com 04 10 07
The world's top gas producers agreed to explore the possibility of enhancing their existing forum at a meeting in Doha on Monday but delegates said setting up a gas cartel was years away.
The ministers agreed to form a high level committee chaired by Russia, as host of the next ministerial meeting, to assess and evaluate the performance of the Gas Exporting Countries Forum (GECF), they said in a closing statement.
"The committee will elaborate a comprehensive plan for enhancing the forum's performance structure and define a way forward for its future development," the statement said.
The decision came after member countries, which together hold more than 70 percent of natural gas reserves, discussed a proposal to set up a cartel along the lines of OPEC, Qatari Energy Minister Abdullah al-Attiyah told reporters.
Russia's energy minister, whose country has the world's largest gas reserves, said however that the GECF should remain unchanged.
"The GECF should continue existing as such and should keep up its transparent and cooordinated position towards consuming countries," Viktor Khristenko said.
He said the GECF would however examine gas prices. "We agreed to launch a joint study on this issue (pricing of gas), and Russia is prepared to be the one who organises such a study," he said.
Algerian Energy Minister Chakib Khelil said he believed the establishment of a gas cartel was not technically viable for at least 10 to 15 years.
"To have an OPEC gas, you need to have a liquid gas market. Right now only a small part of the gas market is liquid. In order to have (gas) liquidity in the market, you need 10 to 15 years," he told reporters at the end of the meeting.
Khelil however said the most important issue facing gas exporters was pricing as "the price of gas does not reflect its real value".
"We don't need an OPEC gas to deal with prices," said Khelil, adding that the new committee was expected to come up with concrete proposals regarding gas prices.
The forum, founded in 2001, groups 15 of the world's gas-rich nations, including Russia, Iran, Qatar and Algeria, which together account for more than 40 percent of production.
The idea of a "gas OPEC," favoured by Iran in particular, gained momentum last August when Europe's two main natural gas suppliers, Gazprom of Russia and Algeria's Sonatrach, signed a partnership accord.
It was given a further boost in February when Russian President Vladimir Putin, whose country's massive gas resources account for nearly 30 percent of known world reserves and 20 percent of production, said it was "interesting."
But Russia's energy minister last week downplayed talk of a gas cartel.
Venezuela and Iran have led calls for forming a gas OPEC, saying this would benefit producers.
"I think having such an organisation for the gas exporting countries is beneficial to all sides," Iranian Oil Minister Kazem Vaziri Hamaneh told reporters after the opening session.
"But the process is a lengthy one as it was with the OPEC," the minister said.
Hamaneh brushed aside opposition from the United States and other Western consumers. "They have not understood the essence of the idea... It's not against any group," he said.
But Egyptian Energy Minister Sameh Fahmi said the world was not ready for a gas cartel, which the International Energy Agency warned in February would reduce demand and hurt producers.
Analysts say the structure and technical limitations of the gas market are not conducive to price fixing. Sales are generally negotiated under long-term contracts, running to 15 or 20 years, and the gas distributed by pipelines.
AFP 091550 GMT 04 07
Copyright© 2007 AFP. All Rights Reserved.
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