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22 Dec, 2008 07:14

‘Gas OPEC’ to meet as world questions motives

The world's top gas exporting countries are meeting on Tuesday to create what's been dubbed the 'gas OPEC'. They claim they just want to stabilize prices. But observers warn of plans to divide up the world's markets.

While world gas prices were soaring its exporters were happy to go it alone. But since August prices have crashed, and brokers warn next year they'll dive another 50 %.

On Tuesday the new FGEC, or Forum of Gas Exporting Countries, will start pooling resources to tap increasingly remote gas fields – known as 'upstream' – and stop the slump in prices – so-called 'downstream'. Gazprom Deputy CEO, Aleksandr Medvedev welcomes the step.

“It's the right move to convert foreign gas exporters to a more structured organization which could look at all the challenges of the current world from upstream to downstream.”

But the threat is the members will force up rates, by simply divvying the world between them, according to Konstantin Simonov, CEO of the National Energy Security Fund.

“Now, the price for example in Germany is $500 a thousand cubic meters of gas. But at the beginning of next year the price can be $230 or maybe less. Of course for Gazprom it is not the best scenario, and that is why the number one question for gas OPEC is we must divide the markets: so we can give the market of China to Iran and to other countries, but they will not be ready to go to Europe.”

The 15 states which meet in Moscow on Tuesday control 73% of world gas reserves. US Congress has dubbed the organization a “gas industry cartel”, and is in talks on how to stop it.