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GECF Not Establishing Cartel

GECF Not Establishing CartelGECF Not Establishing Cartel

Gas Exporting Countries Forum does not intend to establish a cartel, a prominent Iranian energy analyst from London University said.

"Given the negative attitudes toward cartels that usually monopolize the market, GECF's ultimate goal would be to act as a coordinator in the gas industry," Narsi Qorban added in a recent interview published by Financial Tribune's sister daily Donya-e-Eqtesad on Thursday.

Pointing to active interactions among the forum's member states, Qorban said they are neither controlling the global gas market nor fixing gas prices.

"Setting a fair price for gas has always been a controversial issue as exporters' perspective differs from that of consumers'. Some specialists opine that oil and gas prices should be in harmony. However, many, including myself, believe that gas price should have nothing to do with oil prices, as gas market is local and oil transactions are international," he added.  

According to reports, US gas is traded at $4 per million BTU, but in Japan it is $9 per million BTU.  Qorban is of the opinion that GECF's policies can converge with other similar organizations such as OPEC and IEA. Natural gas will be "a key energy carrier" during the next 30 years. Interestingly, 70% of the world gas reserves are held by GECF member states.  

On the critical issue of Russia's position in the forum, Qorban noted that this country is the largest producer and exporter of gas via pipelines, which explains why it plays a key role in formulating the overall policies of the forum although some members may not approve it.

The expert also believes that Qatar, the biggest liquefied natural gas producer, is another leading member whose influence should be maintained in the future as its presence in the forum adds weight to the organization's power.

"It can be said beyond an element of doubt that the US is concerned about GECF emerging as a cartel, as they feel threatened when commodity exporters coordinate their policies. Nonetheless, they seem to be oblivious to the fact that GECF is just a coordinator and not a controller," he said.

Asked about strategies to strengthen Iran's role in the forum, Qorban said unlike Russia and Qatar, Iran is not a prominent  exporter as it accounts for only 1% of the global gas export, yet it produces the largest amount of gas in the region.

"Plans must be made not only to export gas to Pakistan but also to build LNG complexes. Nevertheless, as long as the development plans have not been implemented, Iran will not be able to play a major role in the forum," he said.

Iran holds 18% of the world's proven natural gas reserves, amounting to 34 trillion cubic meters, and more than one-third of OPEC's reserves. It is a strictly regional exporter of natural gas via pipelines to three neighboring countries–urkey, Armenia and Azerbaijan. Turkey receives more than 90% of Iran’s natural gas exports under a long-term contract.

GECF, established in Tehran in 2001, is an intergovernmental organization of 11 of the world's leading natural gas producers, namely Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago and Venezuela. Iraq, Kazakhstan, the Netherlands, Norway, Oman and Peru have the status of observer members.

The forum's members together control over 70% of the world's natural gas reserves, 38% of the pipeline trade and 85% of the LNG production. The three largest reserve-holders in the GECF—Iran, Russia and Qatar—together hold about 57% of global gas reserves.

Narsi Qorban serves as chairman of Qeshm Energy International, secretary of the Environment and Energy Commission at the International Chamber of Commerce's Iran Committee, and director of the International Institute for Caspian Studies. Qorban is a member of the Iran Association of Energy Economics as well as a member of the Tehran-based International Institute for Caspian Studies.

 

Financialtribune.com