Much ado about cartel

Since the announcements made last month by the world’s three biggest reserves of natural gas; Russia, Iran, and Qatar, about their attempt to establish an OPEC-style organization for natural gas exporters, speculations about the formation of the natural gas cartel were sparked worldwide

Representatives of the Russian natural-gas monopoly Gazprom met in Tehran with counterparts from Iran and Qatar and agreed to create the organization and to meet quarterly to reach agreement on pricing and supplies. The three nations hold an estimated 55 percent of known global gas reserves.

According to media reports, the agreement on the new cartel plan may be finalized in Moscow when Russia hosted a forum of gas-exporting countries, including possible additions to the group such as Algeria, Indonesia, Libya, and Venezuela.

However, Russian Prime Minister Vladimir Putin denied later on 11 November the possibility of Russia joining an OPEC-style cartel of gas exporting countries any time soon. His announcement came after talks with his Egyptian counterpart Ahmed Nazif. “We support this idea. But we know about apprehensions and even fears voiced by certain energy consumers,” Putin was quoted as saying.

Putin said that energy exporting countries should coordinate policy to ensure “uninterrupted” energy supplies to consumers, but added that Russia would not forgo its independence to sign a cartel agreement with other states. “None of us is going to cede part of our sovereignty in making decisions,” he added.

Experts argue that there is no point in modeling a gas cartel on (Organization of Petroleum Exporting Countries) OPEC because gas contracts are often signed over the long-term and differ significantly in export-methods from country to country. For example, Russia exports natural gas through pipelines, while Qatar, another major producer, mostly sells it in a liquefied form (LNG). Major world gas exporters such as Norway and Algeria have not so far expressed interest in the planned gas organization.

In fact, media reports and speculations that the world’s largest producers of natural gas, particularly Russia and Iran, plan to create a gas cartel equivalent to the OPEC which sets quotas and prices gained momentum during the 7th Gas Exporting Countries Forum (GECF) meeting in Doha, last year. Contrary to expectations, the main leaders in the natural gas market stressed that there was still a long way to go before establishing such an organization.

Egypt’s position on the proposed new organization, given that it’s ranked the 8th on the world list of gas exporting countries and the 6th on that of liquefied gas exporting countries, was stated before by Minister of Petroleum Eng. Sameh Fahmy on many occasions. “Egypt is opposed to the idea of establishing an OPEC-style cartel for gas exporting countries,” he was once quoted as saying. “Egypt’s rejection to the formation of such a cartel is due to its wish to maintain transparency in international gas markets. We also refuse the idea of building a body that controls one of the essential sources of global energy,” he pointed out.


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