World's biggest gas exporters meet to cut glut
Algiers, April 19, 2010
Many of the world's biggest gas exporters gathered in Algeria on Monday in search of a plan to boost gas prices without causing further pain for any members of the Gas Exporting Countries Forum (GECF).
Energy ministers from Europe's three biggest external gas suppliers - Russia, Algeria and Qatar - hope the diverse group of gas exporters can find a mutually beneficial way to stem a flood of gas that has slashed their profits for over a year.
But what the countries currently competing to sell fuel into a saturated market, largely because of a surge in alternative gas production in North America, can agree to remains vague ahead of the ministerial meeting in the Algerian port of Oran.
'A new model of cooperation is to be devised, beneficial to all. I think we should work towards a stable international gas trade through efficient use of world energy resources,' Algerian Energy Minister Chakib Khelil told reporters before the meeting.
'The elements we should discuss today could constitute the basis for the definition of all possible options for implementation of all appropriate strategies for their achievement.'
The GECF members account for about 70 per cent of the world's conventional gas reserves but are suffering in a global market where demand for their product has been dampened by slow economic growth and an unexpected surge in alternative gas supplies in former imported gas guzzler sponge the US.
'The forecast for the next five years is rather worrying as it displays only weak growth that will bring the demand level in 2013 back to 2008,' Khelil, whose country supplies about 20 per cent of Europe's gas, said on Monday.
Algeria said earlier this year the forum's member countries should agree coordinated cuts in spot market supplies in a bid to reverse the slump in gas prices in Europe in particular.
The forum has been dismissed by many energy analysts as a talking shop that cannot hope to emulate the power of the Organization of the Petroleum Exporting Countries.
It has made no attempt to coordinate supply policy before and the gas market is seen as harder to manage because most natural gas is delivered under long-term contracts, therefore producers do not have the flexibility to influence prices by adjusting output.
As the US market has lost some of its appetite for imported LNG, tanker gas suppliers like Qatar and Trinidad and Equatorial Guinea - all GECF members - have been forced to look for other markets for some of their cargoes, which have often ended up in Europe, driving down prices and hitting Algerian and Russian pipeline sales.-Reuters