x Abu Dhabi, UAESunday 23 July 2017

Doha home to gas forum

The 15-member group seeks to establish itself as a powerful international body to shape the global gas market.

Abdullah bin Hamad al Attiyah, Qatar's oil minister, with the oil ministers Mohammad al Olaim of Kuwait (right) and Abdul Hussein bin Ali Mirza of Bahrain (left) were optimistic about the new group.
Abdullah bin Hamad al Attiyah, Qatar's oil minister, with the oil ministers Mohammad al Olaim of Kuwait (right) and Abdul Hussein bin Ali Mirza of Bahrain (left) were optimistic about the new group.

The newly chartered Gas Exporting Countries Forum (GECF) has chosen Doha as the location for its permanent secretariat, highlighting Qatar's importance as the world's biggest exporter of liquefied natural gas (LNG). Doha beat the Russian city of St Petersburg and the respective Algerian and Iranian capitals of Algiers and Tehran for the honour, as the 15-member group sought to establish itself as a powerful international body capable of shaping the development of a global gas market. "I believe exporters can find the balance between competition and the harmonisation of their energy policies," the Russian energy minister, Sergei Shmatko, said on Tuesday, following the group's annual meeting in Moscow. At the ground-breaking summit, which had been delayed several times amid reports that member countries disagreed over the group's future, the forum agreed on a charter to transform it from a loose consultative body into a formal organisation with a permanent headquarters. "This is a significant event for the market," the Russian president, Dmitry Medvedev, told reporters. "Global stability, energy security and the balance of interests between exporters, transit states and consumers depend on the agreed position of the exporting countries." While Russia, as the world's biggest gas producer and exporter, has been seeking a leading role in the new organisation, it has increasingly turned to Qatar for support for its positions on global gas policy. Some analysts see a Russian-Qatari axis emerging that could act as a magnet for other key regional players such as Algeria and the Gulf's smaller LNG exporters, Oman and the UAE. "Such a gas quintet could have a major pricing influence in the European market and progressively in Asia as well," Theodoros Tsakiris, an energy expert at the Athens-based Institute of Energy of South East Europe, wrote this week in the Middle East Economic Survey. The key to Qatar's influence within the GECF is the important role that LNG is expected to play in uniting the existing regional markets for gas into an integrated global market. As long as pipelines with limited geographic reach offered the only option for gas transportation in most parts of the world, that could never happen. It is only with the development of advanced technology for supercooling and liquefying gas - enabling gas, like oil, to be loaded on to tankers for shipment across oceans - that the prospect of a worldwide gas market began to take shape. Such a market is still far from reality, with regional factors continuing to dominate gas pricing in the world's biggest gas-consuming economies, located in Europe, North America and the Far East. Nonetheless, prospects for unifying at least the European and Asian markets are drawing closer. That has prompted calls from some GECF members for a "gas Opec". "We need mechanisms and tools that will let us better interact between gas exporters to avoid competition," the Venezuelan energy minister, Rafael Ramirez, told the forum on Tuesday. "Co-ordination will prevent unnecessary and harmful competition in the market that may be to the detriment of exports," said the Iranian oil minister, Gholamhossein Nozari. Gas market participants should be able to "adjust and revise gas export prices whenever necessary", he added. Such talk has raised hackles in Europe, where gas consumers are already concerned about their dependence on Russian imports. Russia supplies a quarter of Europe's gas, entirely by pipeline, and is locked into long-term contracts with limited pricing flexibility. Nonetheless, gas exporters have a "logical" interest in "making the market more predictable", the Russian prime minister, Vladimir Putin, told the gas exporters' meeting. The summit coincided with an ongoing dispute between Russia and the Ukraine over gas supplies and pricing. Russia has told its neighbour it will cut gas deliveries unless it promptly settles about US$2.4 billion (Dh8.81bn) in unpaid bills, and has warned that gas supplies to the rest of Europe could be disrupted. About 80 per cent of Russia's gas exports to Europe move through Ukrainian pipelines. tcarlisle@thenational.ae