Gas exporters launch pricing study

Energy ministers from some of the world’s leading gas producers agreed on Monday to set up a high-level committee to study pricing policies and other issues facing the gas sector.

Some delegates suggested it was a step towards an Organisation of the Petroleum Exporting Countries-style organisation. But others sought to play down the idea of a gas pricing cartel.

The decision to set up the committee was reached at a meeting in Doha of the Gas Exporting Countries Forum (GECF), whose members, including Russia, Algeria and Qatar, are responsible for about 60 per cent of the world’s gas exports.

Russia will lead the study into pricing, and the committee’s findings will be presented at the GECF’s next meeting, which is expected to be held in Moscow next year, said Viktor Khristenko, Russia’s energy minister.

Concerns about the possible creation of a gas cartel have risen following statements by Vladimir Putin, Russia’s president, and his Iranian and Venezuelan counterparts, who have all raised the notion. But Russia has appeared to backtrack, and other producers have dismissed the idea. Neither Iran nor Venezuela are net exporters of gas.

Mr Khristenko said: “There are a few issues [in need of discussion] – infrastructure, relations with customers and development of pricing policies.”

Russia, which supplies its gas by pipeline but also has ambitions to create liquefied natural gas projects that would enable it to export via tankers, is concerned that the growing LNG trade outside its borders could impinge on its dominance of the European market.

Moscow also worries that other gas suppliers could beat it to the Asian market. Both Russia’s project to ship gas east via pipelines and its major Shtokman LNG project have suffered delays.

Details on the composition of the new committee have yet to be worked out, said Mr Khristenko, adding that it would not take a decision that would lead to the establishment of a cartel.

However, Chakib Khelil, Algeria’s energy minister, said that in the long term, gas producers were moving towards a “gas Opec”, but stressed that it would take a long time. “The process up to now has been indexed to oil. The world has changed. Now we have lots of things people didn’t talk about five years ago,” he said.

Other delegates pointed out that it was far harder to set up any form of pricing cartel for gas because it was traded in long-term contracts, was linked to oil and much of the world’s gas was transported regionally by pipeline rather than tanker.

Lenny Saith, energy minister for Trinidad and Tobago, said the key issue was how gas producers – and the GECF – adapted to rising product costs and a changing energy market.

“The right context is: as a group of producers faced with these challenges, how do we move forward? [A] cartel is the last thing,” he told the Financial Times. “How do you have a cartel [with] LNG contracts, long-term contracts? The whole structure of the industry is different. It’s taking oil out and selling it everywhere, so it’s a different ball game.”

GECF decisions will not have a significant impact on the US market, which produces about 80 per cent of its gas domestically. But Europe is dependent on Russia and Algeria for more than 40 per cent of its gas consumption.