Top US govt energy analyst dismisses gas cartel

22 May 2007 00:02  [Source: ICIS news]

WASHINGTON (ICIS news)--The top US government energy analyst said on Monday that formation of a natural gas cartel similar to the Organization of Petroleum Exporting Countries (OPEC) is highly unlikely and would be ineffective in any event.

 

Guy Caruso, director of the US Energy Information Administration, told a press conference that discussions among gas exporting countries toward a possible cartel to control production and pricing are not likely to result in a cartel being formed.

 

“We have thought through this,” Caruso said, “and we think it is highly unlikely that a gas cartel will be formed or, if formed, that it would be effective.”  The Energy Information Administration is the research and forecasting arm of the Department of Energy.

 

The 16 member nations of the Gas Exporting Countries Forum (GECF) have launched a year-long study to determine if they could establish OPEC-like control over gas pricing.

 

The availability and price of natural gas is a key concern for US chemicals manufacturers because they are almost wholly dependent on gas as a feedstock.

 

Caruso noted that most gas field development projects worldwide are advanced on the basis of long-term contracts for sale of the gas.  “About 90% of gas developed is on the basis of 20-year and 30-year contracts,” Caruso said, “and we do not see these [gas producing] countries beginning to vary their supply to companies with whom they have long-term contracts.”

 

There would not be enough gas available outside of long-term contracts, he said, to enable effective operation of a cartel.

 

“We think this is unlikely to come about, and it is our judgement that it would not happen,” Caruso said of a gas cartel.

 

However, US Energy Secretary Samuel Bodman has expressed concern over the possibility that GECF countries might form a cartel.

 

The GECF member countries include such US opponents as Venezuela and Iran.  The group also includes Russia, Qatar, Algeria, Indonesia and Nigeria.

By: Joe Kamalick
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