NGI The Weekly Gas Market Report
Russia’s newspaper Kommersant reported last Monday that some of the world’s largest natural gas exporters have reached a final agreement on the creation of a cartel-like group for gas.
The consortium of gas-rich countries, which includes Russia, Iran, Qatar, Venezuela and Algeria, is due to be formally organized in the Qatari capital of Doha on April 9, the newspaper said. The countries are scheduled to meet at the Gas-Exporting Countries Forum, an organization that was found in 2001 to unite the countries that together control more than 70% of the world’s reserves.
Steve Thumb, principal of Arlington, VA-based Energy Ventures, believes the creation of a gas cartel is very debatable. “I don’t think the market’s there for them to control,” he told NGI. Unlike with oil, most liquefied natural gas (LNG) is sold under long-term contracts, and “very little” is sold in the spot market, Thumb said.
In testimony before a House committee last week, Daniel Yergin of Cambridge Energy Research Associates said establishment of a gas cartel-like organization was inevitable, but he did not believe producing countries could control the international gas market in the same way the Organization of the Petroleum Exporting Countries (OPEC) has influenced global oil prices and supplies, the Congressional Quarterly Green Sheets reported.
If a gas cartel should occur, it would be a major blow for the Bush administration, which is on record opposing the formation of a gas exporting group that would mirror OPEC.
Although he didn’t use the words “gas cartel” specifically, Energy Secretary Samual Bodman during a speech in Houston last month said that “initiatives, new or old which seek to control the flow of energy supplies to the market and circumvent the role of the market to set prices, are contrary to the long-term interests of both producers and consumers.”
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