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| 'Gas OPEC' Not Likely to Emerge in Doha |
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A "gas OPEC" is not likely to be given birth during the Qatar-host Gas Exporting Countries Forum (GECF) starting in Doha from Monday, though discussions of such a cartel seem to be on top agenda of the meeting. As an informal meeting of 16 gas producers, the GECF has caused great concerns among gas consumers all over the world for the alleged new cartel. The GECF gas producers, including Russia, Iran, Qatar, Venezuela and Algeria, control 73 percent of the world's total gas reserves and 42 percent of gas production. Though GECF has been intending to control gas market, there are several key factors against its development into a cartel resembling the Organization of Petroleum Exporting Countries (OPEC). One of the reasons goes to pricing. Until now most natural gas trade in the world are shipped by pipelines and under contracts as long as 15 to 20 years, thereby sheltering from potential fluctuations in gas prices, whether set by a cartel or not. Liquified natural gas industry, which can barrel and sell gas abroad, has been growing pressure to reduce the contract terms. However, "that's not going to change overnight, so the pricing impact is limited," Sara Banazak, a senior economist at the American Petroleum Institute, told a US media. The second factor goes to that gas is substitutable. Unlike oil trading, the global market for natural gas, mainly heating and generating electricity, is too fractured, which can be substituted by coal, nuclear sources as well as green fuel. Major gas producers and large economies hold opposition against forming a cartel in this industry. On Friday, Russian Minister of Industry and Energy Viktor Khristenko told local media that global gas market will not be formed within 10 to 15 years from now and a gas organization like OPEC will not be created until then. Khristenko, whose country sits on the largest natural gas reserves in the world, criticized that the statements by several Western countries about the forthcoming formation of a "club of gas exporters" were "destructive and senseless." Qatar, an OPEC member which holds the third-largest natural gas reserves in the world, has also been lukewarm towards the idea. Its Energy Minister Abdallah ben Hamad al-Attiyah said his country would examine the proposal to create a cartel and would see how the idea was received by other delegates. More explicitly, Ibrahim al-Ibrahim, economic counselor to the Qatari Emir, said his country does not want an organization like OPEC, saying the forthcoming Doha forum will be focused on coordinating contractual conditions between exporting countries and maintaining a dialogue with importers. Iran and Venezuela, two of the loudest voices in favor of the gas cartel, have little heft in the market. According to media reports, Iran's gas output has been mitigated by a surge in domestic consumption, infrastructure problems and US sanctions against its exports. Because of these factors, Iran is already a net importer of natural gas. Venezuela is also likely to be a net importer within a few years. Meanwhile, major gas consumers in the world, the United States and European Union, have all voiced opposition towards a "gas OPEC." European leader have said they would stand against any efforts to set up it since Western Europe is quite vulnerable to fluctuations in supply piped from Russia and Algeria. Nevertheless, in order to take more control over the pricing upon a booming gas market, the gas producing countries will undoubtedly produce some forms of cooperation in the coming Doha meeting, observers here said. (Xinhua News Agency April 9, 2007) |
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