US gas producers dispel notion of ‘gas OPEC’

26 April 2007 19:42  [Source: ICIS news]

WASHINGTON (ICIS news)--Major US natural gas producers said on Thursday they are not concerned about prospects for a global gas pricing cartel along the lines of OPEC, saying the gas market would not sustain a cartel.

 

Chris Conway, chairman of the Natural Gas Supply Association (NGSA), told a press conference that there is no need for concern about prospects for a natgas pricing cartel.

 

“The gas market is quite different from the oil market,” Conway said.  “I would find it hard to envision a cartel forming for gas the same as on the oil side.”

 

Some among US chemicals manufacturers - who are wholly dependent on gas as a feedstock - are concerned about even the remote prospect of a natgas pricing cartel.

 

Conway, who also is president of the gas and power division of ConocoPhillips, termed talks amid some major gas producing countries about an OPEC-like cartel “very preliminary, and I don’t see this as being something to be too concerned about.”

 

He was referring to the meeting in Qatar earlier this month of representatives of 16 natgas exporting countries, known as the Gas Exporting Countries Forum (GECF).  The group, founded in Teheran in 2001, includes some major US opponents such as Venezuela and Iran.

 

In that early April meeting, the GECF countries voted to establish an expert group to study and report on pricing, infrastructure and relations between producers and consumers.  The report is due at the group’s seventh annual meeting next year.

 

US Energy Secretary Samuel Bodman has expressed concern about the potential cartel.

 

However, Conway said the global gas market “would have to develop quite a bit more” in order to sustain a pricing cartel.

 

Most observers believe a natgas pricing cartel would not work because gas production is more widely spread across the globe, gas markets are still largely regional rather than global and most gas trading is done under long-term contracts with only small volumes in spot trading.

 

Conway said North American gas producers are confident they will be able to find sufficient new gas supplies - including unconventional gas resources in shale and subsurface sand deposits - to meet industrial and residential consumers’ demand going forward.

 

NGSA represents major US gas exploration and development firms.

By: Joe Kamalick
+1 713 525 2653

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