[OPE] a new world gas cartel?

... natural gas does not have a global market like oil. For the most part, gas is not traded on the open market (unlike oil), and the majority of contracts between producers and buyers are long-term deals. Hence, gas pricing functions differently than oil pricing. In addition, natural gas transportation is more dependent on pipelines than is oil, since the former needs to be liquefied (and subsequently re-gasified) if transported by ship. Consequently, the regional geography that links producers-exporters and buyers still prevails over a more global network of transport routes. For instance, Russia (the exporter) and the European Union (the importer) are tightly linked by the fact that an extended network of gas pipelines exist between the Russian Federation and Eastern, Central and Western Europe. (...) Iran and Venezuela... lack the investment and technology to exploit their natural gas resources fully. Russia is by far the world giant in natural gas production and exports (...) Since Russia's energy giant Gazprom is rapidly becoming Europe's dominant natural gas operator, Moscow is interested in augmenting its political and economic influence on those countries that may provide Europe with an alternative. http://www.pinr.com/report.php?ac=view_report&report_id=640&language_id=1

However, the proposed new group, a formal version of the Gas Exporting Countries' Forum, which has existed since 2001, could try to drive up the price of gas over the medium term. The emergence of a spot market for cargoes of liquefied natural gas, which can be sold wherever prices are highest, also creates potential for short-term market management, although those cargoes are only a small proportion of total gas sales. http://www.ft.com/cms/s/0/e7b1c4ae-d15b-11dd-8cc3-000077b07658.html

J.

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Received on Thu Dec 25 19:35:35 2008