News update from Eddie Proffitt 21/4/10

21.04.2010

The natural gas producing Nations have formed an organisation known as the Gas Exporting Countries Forum that some believe is an attempt to form a Gas ‘OPEC’. The group met this week in the Algerian coastal city of Oran.

Prior to the meeting Algeria had called for production cuts to reduce the overproduction in the Global gas market however this failed to find support at the GECF meeting.

Algeria’s Energy Minister Chakib Khelil said after the meeting that gas exporters should achieve gas parity to oil prices through their sales contracts. However he went on to say it is up to each country to adopt its own strategy to raise gas prices to the level of oil.

“Gas exporting countries decided to let each country adopt its own strategy through spot contracts to achieve gas prices at parity with oil prices,” he said.

Buyers have recently reduced their volumes of gas bought under long-term contracts with prices linked to oil and bought more from spot markets such as in the U.K., where the price for same-day delivery is 21 percent below its five-year average.

The Group also expressed concern about the effect on the gas market of taxation on carbon-dioxide emissions.

(The membership of the Forum is Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad & Tobago and Venezuela. The forum had invited Kazakhstan, Yemen and Peru to attend the Oran meeting. Angola and Yemen said today they might join the group.)