Exporters move to create Opec-style gas cartel

Gas-exporting countries took the first steps towards creating an Opec-style group yesterday at a meeting in Doha

Gas-exporting countries took the first steps towards creating an Opec-style group yesterday at a meeting in Doha. Delegates at the meeting played down the significance of the move, saying customers would see no immediate change but it is likely to dismay both the European Union and the United States.

"In the long term we are moving towards a gas Opec," confirmed the Algerian energy and mines minister, Chakib Khelil, after the Doha meeting.

Since the early 1960s, the oil cartel Opec has tried to control both the supply and the price of crude, and gas was, until recently, the poor relation. A special study group, led by Russian officials, will report back on the market situation for gas to next year's meeting in Moscow.

Gas has become increasingly important, both as an energy source for importing countries and for exporters, who have seen prices surge. This has made the concept of a cartel increasingly attractive for countries such as Venezuela and Algeria, who hope to squeeze even higher charges from customers.

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Ireland imports about 90 per cent of its gas from the UK and Norwegian fields in the North Sea, with 10 per cent coming from Kinsale, according to Bord Gáis. While Ireland does not directly import gas from any of the prospective members of this cartel, their decisions would affect prices on the European markets and have a knock-on effect for this country.

Until now, Russia, has shunned an Opec-style gas grouping, though its position has gradually softened. President Vladimir Putin recently agreed that it was an "interesting question".

After a meeting with Iran's spiritual leader, Ayatollah Ali Khamenei, earlier this year, Mr Putin seems to have warmed to the notion, according to the Russian business daily Kommersant. It claimed that Russia's stance on a cartel had shifted.

Since the gas-exporting countries first met in 2001, they've denied that creating a second Opec was the logical endgame, though this position has gradually evolved. With Iran, Russia, Algeria, Venezuela, Qatar, Trinidad and Tobago, Nigeria, Oman, UAE, Brunei, Malaysia and Indonesia now discussing the concept of a gas cartel, it's suddenly a realistic scenario.

Together, the nine major gas exporters control about 70 per cent of world markets, energy analysts estimate. Since gas isn't sold by the barrel or carried on tankers, but through fixed pipelines, the market was considered less pliable to cartel pressures. However, new liquid natural gas processors have increased gas portability, giving suppliers alternative ways to sell their product.

For the EU, the most worrying concern is the interest of both Algeria and Russia in joining the cartels. Together, they account for almost half of gas consumed in Europe. In Italy, the figure is higher, with 69 per cent of its gas originating in the two countries. The problem is less acute for the US, since it is self-sufficient in gas.

The EU's energy commissioner Andris Piebalgs last week said he did not endorse this as a solution to Europe's energy needs.