The Gas Exporting Countries Forum meeting next week will discuss ways of stabilizing natural-gas prices.
The Gas Exporting Countries Forum meeting next week will discuss ways of stabilizing natural-gas prices, said Qatar"s Oil Minister Abdullah bin Hamad al-Attiyah. Natural gas futures for delivery at the Henry Hub in Louisiana have fallen 19 percent this year to $4.566 a million British thermal units on the New York Mercantile Exchange. Prices sank as low as $2.409 in September.
?Limiting the supplies in most of the contracts is impossible because they are long-term contracts,? al-Attiyah told reporters in Cairo today. ?But we are going to see and discuss how to stabilize the gas price. Gas should have a premium, it is a clean fuel, it"s a choice fuel.?
European utilities such as E.ON AG and GDF Suez SA buy most of their gas under supply contracts linked to the cost of crude- oil products that are valid for as long as 30 years. The accords have take-or-pay clauses requiring them to take minimal volumes, even when demand drops, or pay a penalty.
Demand for gas in Europe dropped by a ?record? 5 to 7 percent this year, OAO Gazprom Deputy Chief Executive Officer Alexander Medvedev said last month. Gazprom is the world"s biggest gas producer and Europe is its main market.
As gas traded on the open market has slumped, long-term oil-linked gas is now more expensive, leading some companies to delay deliveries or ask to renegotiate prices. Oil futures have advanced 74 percent in New York this year.
A bloc of natural-gas producers is a reality as Russia seeks to limit oversupply of the fuel, Herman Franssen, president of International Energy Associates Inc., said at a conference in London in October.
The Forum, dubbed by some as Gas OPEC or Gaspec, won"t set production quotas like the Organization of Petroleum Exporting Countries, said Franssen, a former chief economist at the International Energy Association. Members will instead inform each other about investment decisions ?so they don"t all invest at the same time? and trigger an oversupply, he said Oct. 28.
Qatar will host a meeting of the Gas Exporting Countries Forum of 11 nations on Dec. 9 to discuss sagging world markets.
Russia and Iran, which have the world"s largest gas reserves, are competing to name the first GECF secretary- general, a step in establishing a group that may one day match the price-setting clout OPEC has in oil markets.
The appointment of a secretary general will ?jump start? the organization and make it more effective, said Shokri Ghanem, the chairman of Libya"s National Oil Corp.
Other members of the forum include Venezuela and Algeria.
Together the Group holds more than two-thirds of the world"s proved gas reserves, according to BP Plc"s Statistical Review of World Energy.