Natural gas giants plan new group on pricing
The Trinidad
Guardian
Qatar
Petroleumworldtt.com
04 15 07
The world’s
largest natural-gas-exporting countries plan to
establish a high-level group on gas pricing, the
Russian energy minister
said on Monday, though his counterparts for Iran and Qatar denied the aim is
a cartel.
Europe and the United States have expressed worries
that the gas exporters seek to establish a cartel
along the lines of Opec that would control production
levels and pricing.
Faced with the concerns, leading producers Iran
and Russia have backed off talk of doing so at
the gathering of the 16-member Gas Producing Countries
Forum.
But Russian Industry and Energy Minister Viktor
Khristenko said the forum would create a group
to look into pricing.
“Russia is ready to be the one that will
carry out research into the problem of price formation
for gas,” Khristenko said, according to the
Russian Interfax news agency.
He
did not say how such a group’s
operations would differ from those of a cartel,
but Jonathan
Stern, director of gas research at the Oxford Institute
for Energy Studies, said Russia was genuinely interested
in reviewing the way gas prices are calculated,
rather than creating a formal price-fixing cartel.
“It makes sense for gas exporters to re-examine
why the price of gas is linked to oil prices,” Stern
said. Gas prices in long-term European contracts
are tied to oil prices.
Earlier, energy ministers from Iran and Qatar
denied the talks were aimed at creating a gas cartel
modeled on Opec.
Iran’s
Minister of Petroleum, Seyed Hamaneh, and his
Qatari counterpart, Abdullah
al-Attiyah,
said discussions aimed to create a stable world
market for the fuel.
“I hate the name cartel. We are not a cartel,” al-Attiyah
told reporters. “We’re just here to
consider our interests.”
Hamaneh
added that “there is no discussion
in this meeting about a cartel. The cartel is not
an issue. We’re here to exchange views on
technical issues and on the markets.”
Al-Attiyah invited natural-gas importers to discuss
these issues with the exporters, rather than protesting
the two-day meeting in Doha and talking about possibly
imposing new taxes and regulations.
“The West is reacting negatively,” al-Attiyah
said. “They should sit with us and discuss
this with us before imposing any regulations on
us or any new taxes.”
After
a short public opening ceremony, the meeting
went into closed session. On Tuesday
the gathering
toured Qatar’s sprawling natural-gas export
and liquefaction plants.
The forum brings together countries controlling
more than 70 per cent of world gas reserves, including
Algeria, Brunei, Indonesia, Iran, Malaysia, Norway,
Nigeria, Oman, Qatar, Russia and Turkmenistan.
Many experts say a natural-gas cartel that resembles
Opec group would be tough to achieve.
Unlike oil, which is traded on an exchange that
constantly updates the market price based on supply
and demand, most gas is sold under tight contracts
that allow buyers to lock in prices for up to 25
years.
The formation of a gas exchange also would be
difficult because most natural gas is delivered
via pipelines and is not as easily shipped around
the world to different buyers as oil.
Pipeline infrastructure also requires significant
investment that often makes long-term contracts
necessary.
Talk
of a cartel first arose in January, when Iran’s
supreme leader, Ayatollah Ali Khamenei, proposed
Iran and Russia create
one. Initially,
the idea seemed to gain favor among producers.
Russian
President Vladimir Putin and Qatar’s
emir agreed to explore the idea. President Abdelaziz
Bouteflika of Algeria and President Hugo Chávez
of Venezuela are also known to support creation
of a cartel.
But it heightened worries in Europe, which relies
on Russia for 44 per cent of its imported gas.
However, Venezuelan Energy Minister Rafael Ramirez
told the state-run Bolivarian News Agency on Monday
that his government was discussing the creation
of a high-level group on gas pricing with fellow
natural-gas-producing countries like Bolivia.
Natural
gas supplies 23 per cent of the world’s
energy, making it the third-largest energy source
behind oil and coal, according to the Energy Information
Administration. AP
Trinidad
Guardian
Friday, April 13th 2007
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©2007 Trinidad Guardian. All Rights Reserved.
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