Gas cartel faces huge challenges

06 June 2008
Without clear aims and intentions, gas producers’ hopes of creating a credible cartel will come to nothing.

When Iran floated the idea of creating a gas cartel early last year to operate in a similar fashion to Opec, gas importers around the world feared the worst.

They need not have worried. The idea that countries as disparate as Malaysia, Algeria, Qatar, Russia and Iran would be able to magically band together and develop a new level of co-operation was folly.

If a cartel is created, it is most likely to emerge from the Gas Exporting Countries Forum (GECF), a group of about 14 countries without a formal membership system.

Analysts view it as a talking shop at best, and little has been achieved since last year’s meeting in Qatar - the first since the collapse of talks in Venezuela in 2005.

At the Doha meeting, Russia, the world’s largest gas exporter, vowed to set up a group to look at pricing, infrastructure and the relationship between producers and consumers. But the latest meeting in Moscow has now been delayed by four months as countries squabble over what a potential charter, which could form the basis of a cartel, should look like.

Some big stumbling blocks lie behind the delay. Gas has yet to become a globally traded commodity and is still priced on a formula derived from oil. Transport networks are limited and major exporters such as Canada and Australia are not even members of the club.

Gas exporters are right to want a greater say in the trade of gas. But until they can develop clear aims and intentions, their hopes of using the GECF as a credible body to represent their interests will come to nothing.

Postponing annual meetings at the last minute is the latest sign that the group has some way to go.

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