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19 Apr, 2010 06:19

Gas producers meeting looks to even out pricing

The Gas Exporting Countries Forum, also called Gas OPEC, has been held informally since 2001, and will convene for the tenth time on the 19th of April, as gas exporting countries ramp up their profiles.

Gas OPEC wants to find a way to stabilize prices in a world saddled with a glut of gas and weak demand according to Qatar’s Energy Minister, Abdullah Bin Hamad Al-Attiyah.

“I don't think that global gas prices are fair. We always demand that gas prices are at least linked to the oil price. Gas just cannot be treated this way. Earlier we had hoped that gas prices would be above those for oil.”

Aleksandr Nazarov, senior oil and gas analyst at Metropol IFC says that any attempts to rid this link could have an adverse effect on an already fluctuating and seasonal gas price.

“We all know what happened as a result of speculating the oil, not like raw material, but like an asset, which happened back in 2008 and 2009. So oil price in 12 months went from $140 to just $30 per barrel, so basically the same thing could happen to gas prices.”

Russia is Europe’s largest gas exporter. Yet, it struggles to find an agreement on what gas prices should be, with the price averaging anywhere between $170 and $297 per 1000 cubic meters. In addition, it faces constant demand from customers to renegotiate its contracts.

Meanwhile, gas producers have said prices should be closer to $11 per British thermal unit, which Aleksandr Nazarov, thinks could curtail demand drastically.

“Which assumes a gas price close to $400 per 1000 cubic meters, which actually, I think is too high for European customers.”

So those pushing for more regulation are faced with a dilemma – how much to charge without actually outpricing their customers.