Opec Mark II? Gas is quickly catching up oil in importance in the global economy and now accounts for 20% of total commercial energy use. Now, three Middle Eastern states are joining forces with Russia and Kazakhstan prompting accusations that a gas cartel is in the offing.

Author:Ford, Neil

THE MEETING OF the Gas Exporting Countries Forum (GECF) in Doha in April gave out mixed messages to those who fear the creation of a gas producers' cartel. Although the member states announced they had no plans to jointly set international gas prices, the fact that the meeting took place at all indicates a greater degree of coordination among major gas exporters. Moreover, delegates agreed to set up a high level GECF committee to discuss the issue of pricing, which importing nations fear could be the first step towards the creation of a gas sector version of Opec.

Russia, by far the world's biggest gas producer, will organise the committee with Kazakhstan, plus Algeria, Iran and Qatar. The GECF statement on the aim of the committee was somewhat vague, claiming it would "elaborate a comprehensive plan for enhancing the forum's performance structure and define a way forward for its future development". However, there is no doubt the member states would like to devise some method of driving up international gas prices if possible.

Gas is quickly catching up oil in importance in the global economy and now accounts for 20% of total commercial energy use. As a result of the inclusion of the three countries with the largest gas reserves in the organisation, Russia, Iran and Qatar, GECF member states control 70% of proven gas reserves, a higher proportion than Opec controls of oil reserves. Although most Middle Eastern states neglected gas sector development at the expense of oil for many years, Qatar has successfully demonstrated its value and other countries in the region are now developing sizeable gas export sectors. The UAE is an important liquefied natural gas (LNG) producer, while Iran has hopes of much greater LNG and piped gas exports.

The Iranian government has followed Venezuela's line in advocating the creation of a gas Opec. "Having such an organisation for the gas exporting countries is beneficial to all sides," observed oil minister, Kazem Vaziri Hamaneh. However, Russian energy minister, Viktor Khristenko, played down such ambitions saying Iran "should continue as it is". Russia is keen to expand its own gas production over the next few years and would not be keen to have its output restrained by quotas of any kind.

Algeria is also reported to favour the creation of a price control mechanism, while both Egypt and Qatar are opposed to any move in this direction. Qatari oil minister Abdullah bin Hamad Al Attiyah strongly disagrees and...

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