Gas 'cartel' idea puts the cat amongst the pigeons: last month The Middle East discussed the early mixed messages emerging from the Gas Exporting Countries Forum in Doha, on the idea of a gas producers' cartel. In this issue Ed Blanche puts flesh on the bones of the idea that has led to considerable international anxiety and, in some cases, vehement opposition to the scheme that could reshape the global energy market.

Author:Blanche, Ed
Position:BUSINESS & FINANCE
 
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ENERGY MINISTERS OF the member states of the Gas Exporting Countries Forum (GECF), produce around 60% of the world's gas exports, decided when they met in Qatar in April to set up a high-level committee to study pricing policies and other issues.

The decision did not meet with universal approval; in fact some of the delegates gathered at Doha's Ritz Hotel saw this as a move towards the creation of a cartel similar to the Organisation of Petroleum Exporting Countries (Opec).

The committee, headed by Russian energy minister, Viktor Khristenko, is expected to deliver its report at the forum's next meeting, scheduled for Moscow in 2008. Khristenko has said that the committee would not be involved in deciding whether a gas cartel would be established. But Chakib Khelil, the energy minister for Algeria, one of the major gas producers, said that in the long term, the forum was moving towards an international gas producers' alliance.

"The process up to now has been indexed to oil," Khelil said. "The world has changed. Now we have lots of things that people didn't talk about five years ago." UAE minister, Mohammed bin Dhaen Al Hamli, cautioned that "the time of cheap gas is a matter of the past".

The 16-member GECF, established in Tehran in 2001, includes major gas exporters like Russia, Qatar, Nigeria and Algeria, as well as future exporters like Venezuela and Iran. Russian President Vladimir Putin first endorsed the idea of a gas alliance in 2002 and has championed the concept ever since. So far the GECF has been a fairly informal grouping. But following the Doha meeting it is clearly seeking a more formalised structure and closer coordination between gas producing states on output and pricing at a time when gas demand is growing while future oil supplies become problematical.

This falls short of setting up an international gas producers' alliance, but according to the International Institute for Strategic Studies (IISS) in London, the Doha meeting took the forum "a step closer" to the formation of such an organisation. "The decision to set up an expert panel to study pricing and related issues may be interpreted as an initial reconnaissance move towards changing the structure of the world's gas trade," the IISS declared.

During a landmark visit to Saudi Arabia and Qatar earlier this year, Putin discussed the idea of a gas alliance with the Gulf rulers. Sheikh Hamed bin Khalifa Al Thani, the emir of Qatar, which has the world's biggest gas field, dismisses the prospect of an Opec-style cartel, but says he and Putin want more cooperation among competing gas producers in their dealings with the gas-consuming countries.

Spearheaded by Russia, the mooted alliance could include Turkmenistan, Kazakhstan and Uzbekistan, possibly with Libya and Algeria, Europe's second largest gas supplier, and some Gulf states signing on...

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