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Gas exporters plan OPEC-like cartel

Gas exporters plan OPEC-like cartel

By Agence France Presse

Doha, April 9:

The world’s biggest gas exporting countries were meeting in Qatar today to discuss proposals to form a cartel — an idea that has consumer nations worried and divided gas producers themselves.

The Gas Exporting Countries Forum, hosted by Qatar which aspires to eventually become the world’s top exporter of liquefied natural gas (LNG), has been a low-key grouping but talk of a cartel has propelled the organisation into the limelight.

Founded in 2001, the GECF is an informal structure grouping 15 countries. It includes Russia, Iran, Qatar, Venezuela and Algeria, which together control 72 per cent of world reserves and 42 per cent of production.

Until now, its activities have remained limited, and it has not even met since 2005. The one-day Doha meeting, the sixth since the forum was founded, is focusing mainly on the possibility of forming a cartel along the lines of the Organisation of Petroleum Exporting Countries (OP-EC). The idea of a ‘gas OPEC,’ favo-ured by Iran in particular, gained momentum in August when Europe’s two main natural gas suppliers, Gaz-prom 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 per cent of known world reserves and 20 per cent of production, said it was ‘interesting.’ Western European countries are concerned that Moscow might gain leverage over consumers by coordinating supplies with other gas-rich nations.

On the eve of the meeting Venezuela and Iran - whose governments are regarded with hostility by the US - said they strongly backed forming a gas cartel.

“We are here to support gas OPEC. It’s a very good idea. It’s very important for producers to have some accord,” Venezuelan energy minister Rafael Ramirez said. “We also think that if the forum moves in that direction forming a cartel, it will strengthen the forum,” Iranian oil minister Kazem Vaziri Hamaneh said.

But Egyptian energy minister Sameh Fahmi said the world was not prepared for a gas cartel. “It’s not a good idea at this stage,” he said. “At least in the OPEC, you know what the price of the crude, you know the quotas. With regards to gas, nobody knows the prices and nobody is declaring the price of their exports,” Fahmi said. “It’s very difficult, we are talking about the security of supplies. We should have stability in the market through talks with the consumers,” the minister said.

Qatar declined to comment on the proposal before all ministers had a chance to discuss the matter although its energy minister Abdullah al-Attiyah moved to allay consumer fears. “Consumer countries should not be worried and should not pre-judge the proposal to establish a cartel. They should wait and see,” he said. Despite Putin’s statements, Russia’s energy minister has downplayed talk of a gas cartel. “Are we going to sign up to a price policy? Of course not,” industry and energy minister Viktor Khristenko said.

The International Energy Agency warned that a cartel would reduce demand and hurt producers. Analysts say the structure and technical limitations of the gas market are not conducive to price fixing.