The Gas Exporting Countries Forum (GECF), at its first meeting in last two years, decided to set up a group of experts to study how to strengthen the group, which has so far exercised very little power. The move is widely perceived as a step towards forming much debated ‘gas OPEC’. However, GECF sought to restore confidence in consumer countries that it was business as usual for now. Algerian minister of energy and mines, Chakib Khelil, has said, ‘In the long term we are moving towards a gas OPEC. It will take a long time.’ The study group will look at pricing, infrastructure and the relationship between producers and consumers.
Viktor Khristenko, Russia’s energy minister, whose country has the world’s largest gas reserves, will head the committee. Russian energy minister said, ‘he saw no need for the imminent formation of a gas cartel along the lines of the Organisation of Petroleum Exporting Countries (Opec).’ The committee will present its study report during the gas forum’s next ministerial meeting in Moscow next year.
Gas customers in America and Europe are already worried that if a gas cartel is formed, they will be subjected to higher prices and reduced supplies. The possibility of inception of a natural gas group has especially distressed leaders in Europe, where anxiety emerge about the EU’s growing dependence on Russia, which already supplies 44 percent of its imported natural gas.
According to the Energy Information Administration, natural gas supplies constitute around 23 percent of the world’s energy, making it the third-largest energy source, following 36 percent for oil and gasoline, and 26 percent for coal. It further suggested that Natural gas consumption worldwide will rise to 182 trillion cubic feet in 2030 from 95 trillion cubic feet in 2003. Therefore, this is quite obvious that consumer nations will feel vulnerable as the members of GECF account for about 60 percent of world gas exports.
European Commissioner for Trade Peter Mandelson has said that a gas cartel could be a misleading signal for gas consumers, while U.S. Congresswoman Ileana Ros-Lehtinen has maintained that it would be a long-term threat for global energy supplies, and would negatively affect Russian-American relations. She has labeled the gas cartel idea as a global instrument for extortion and racketeering.
This time around, experts are of the view that formation of a gas cartel is not possible at the moment. As a matter of fact, a natural gas cartel can only succeed when liquefied natural gas accounts for the majority of internationally traded gas, permitting producers to ship the fuel in tankers and sell it on the spot market, like oil.
At present, only around 23 percent of gas exports move on tankers, compared with the fact that about 60 percent of internationally traded oil is shipped on tankers. The largest chunk of gas supply is currently shipped through pipelines, locking producers and consumers into long-term contracts on either end of the pipe.
