An OPEC for gas : An idea that could emerge in the next Doha Forum

It seems that the idea of creating a gathering for naturel gas producing countries, following the example of the Organization of Petroleum Exporting Countries (OPEC), is taking shape while the states which excluded the idea, such as Russia and Algeria, have expressed willingness to study it few days before the Forum of Gas Exporting Countries to be held on April 12th in Doha.

Several media have anticipated today that Algeria, Russia, Qatar, Iran and Venezuela, which are the major gas producing countries will announce the "OPEC of gas" during the forum.

The Algerian Minister of Energy and Mines, Chakib Khalil, said that such a grouping could emerge if producers are interested. A few weeks ago, Khalil, himself, saw the creation of such a grouping "impossible".

The change in attitude of Algerian Minister intervenes after the Algerian president, Abdelaziz Bouteflika, has said last week that this idea should not be rejected in advance.

Meanwhile, the Qatari Minister of Energy Abdullah al-Attiyah, who expressed his rejection of the idea in early February, has said, early March, that he will wait until the holding of the forum to announce his position.

The idea of creating a coalition of gas producing countries appeared last summer, specially after the alliance between the Russian company "Gazprom" and the Algerian "Sonatrach", The two biggest exporters of gas to Europe.

The statements of Russian President Vladimir Putin, beginning of February, have strengthened the possibility of realizing this idea. Putin said that such an idea was "interesting".

However, experts believe that the creation of a grouping of gas exporting countries similar to OPEC, is difficult to achieve, given the specificity of the gas market.

In this context, Francis Perrin, editor of the magazine Arab Oil and Gas, said: "The fundamental difference between the gas and oil lies in the way of action". OPEC has the power to change its production ceiling to influence prices", he said. He explained that the flow of oil in global stock exchanges, like London and New York, is through contracts whose duration does not exceed a few months, that helps OPEC to change the production volume.

Although the gas had also circulated in the global financial markets, transactions on the gas represent only a tiny market rates. Most contracts are made through bilateral agreements, usually based on oil prices and extend over 15 to 20 years.

In addition, the gas market takes a regional character because of the difficulty of transporting this material unlike oil. The gas transmission requires the construction of pipelines or the use of ships carrying methane when it comes to long distances, which, therefore, requires gas liquefaction, which is financially costly.

According to Perrin, it is possible "to imagine another type of organization that can help to exchange information and studies and facilitate investment cooperation in energy development and gas". He believes that instead of intervening directly in the production and prices, the Member States in such an organization could agree on the revision of contracts, most of which is not profitable compared to current prices on the market which grew during the last five years.

But experts believe that gas exporting States should not reconsider the long-term contracts because these contracts represent a guaranted source of financing on long-term.

For his part, Andrei Fedorov, an analyst at Alpha Bank, expects a negative reaction of European gas consumers. He warned that these countries could run to diversify gas supply sources to reduce the impact of such an organization.