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Idea of 'gas OPEC' gains currency

Idea of 'gas OPEC' gains currency

9-gas---qatar1.jpg
9-gas---qatar1.jpg

AFP

An undated handout picture shows the Al-Shamal gas field north of Qatar. Qatar is among a number of natural gas-producing countries considering the formation of an OPEC-style cartel that has gas importing countries worried.

Moves are afoot to set up an OPEC-style cartel for gas but even though the proposal seems a long way from reality just yet, consumers are concerned that exporters will gain a free-hand to set prices.

The world's top gas exporters currently have the Gas Exporting Countries Forum or GECF as their informal platform for dialogue.

It was set up in 2001 and comprises around 15 gas-rich countries, including Iran, Russia, Qatar, Venezuela and Algeria, who control 73 percent of the world's gas reserves and 42 percent of gas production.

Nevertheless, "there is a desire" among exporting countries "to have something more concrete," said Iranian energy official, Javad Yarjani, speaking on the sidelines of an international energy forum in Rome last month.

An executive of the Iranian National Oil Company, Akbar Torkan, said that "in the next 20 years, oil's share of fossil fuels will decrease while gas' share will increase. It is therefore necessary to focus more on gas."

Claude Mandil, former head of the International Energy Agency, suggested the GECF could even set up its own secretariat along the same lines as the Organization of Petroleum Exporting Countries (OPEC) at a meeting to be held in Moscow in June.

Qatar's Energy Minister Abdallah al-Attiyah had suggested in January that a "gas OPEC" could be set up at the next meeting of the GEFC.

Nevertheless, the idea is not finding many friends among consumer countries, who fear it would only allow gas exporters the same leeway as OPEC has on oil.

While OPEC abandoned its price range for a barrel of oil in 2005, it still has a system of quotas, which it can change in response to market conditions.

The head of the Libya's National Oil Corporation, Shokri Ghanem, sought to downplay such fears, insisting that gas exporters did not want to set up a cartel.

Instead, they wanted a "structure for cooperation and the exchange of information," much along the same lines as the OPEC's research and analysis centre, he said.

Iranian delegate Yarjani insisted that such an organization would not run against the interests of consumers because there was a great deal of interdependence between exporters and consumers of gas.

IEA chief Nobuo Tanaka said that "if gas exporters want to set up an organization, we can't prevent them."

British Energy Minister Malcolm Wicks said he did not like the idea of a gas OPEC.

"We support open markets. We think that there should be competition. We need transparency, we need to know where we stand. We don't want another cartel."

He continued: "Cartels are there to fix things, often to the detriment of economies and the consumer. We think this is a foolish proposition."

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