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GECF calls for oil, gas price parity

Source: Mehr News Agency

The 11th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) was held in Doha on Thursday, calling for gas prices that reflect parity with oil.

Gas burns in part of South Pars gas field on the northern coast of Persian Gulf, in Assalouyeh, Iran. (file photo)

Ministers attending the forum expressed 'concern' over the currently low gas prices, which they said 'threaten investments in new fields and gas infrastructures'.

"Gas prices must be regulated and show greater parity to oil price; the gas and price have to have some sort of correlation," Venezuelan Energy Minister Rafael Ramirez on the sidelines of the GECF meeting.

Gulf Times quoted GECF Secretary General Leonid Bokhanovsky as saying that, "no single producer can be satisfied with the current price for gas. The current price level on liquid markets for gas cannot secure stable investment cycle. That's why it is logical to expect a balance between spot prices and long-term contract prices which are linked to the oil price."

Algeria's Oil Minister Youcef Yousfi also said, "The gas market was built on a long-term basis and the introduction of LNG is based on long-term contracts. We don't think it is time to change them. Doing so would be at the expense of producers and consumers."

He also said Europe and the Asia-Pacific region would lead demand for natural gas over the next few years.

"The worldwide natural gas demand will be driven by the Asia-Pacific gas market, which should continue to record sustainable growth of more than 6% a year," he said in a speech to the members of the GECF.

Yousfi said Europe would only be producing about one-third of the gas it consumes by 2020, adding that the European Union would 'need to import an additional volume of up to 160 billion cubic meters of the fuel by 2025 to satisfy demand."

The ministers vowed to work closely to develop a stable and transparent gas market, a statement issued by the GECF at the close of the one-day meeting said.

"The ministers believe that for the sake of ensuring a long-term balance of interests of suppliers and consumers, European Union's plans to introduce new gas-related legislation which requires additional consultations with gas supplying countries.

The ministers noted the progress being made by the GECF Secretariat in developing the working plan for the forum for the 2011-2015 period and its long-term strategy. The ministers stressed the development of the GECF's model for gas supply and demand as one of the most important elements of the working agenda of the secretariat.

An agency dispatch said Russia's Energy Minister Sergei Shmatko expressed opposition to any production restrictions to boost prices.

"Achieving a fair price for natural gas does not mean imposing restrictions on gas production. Seeking a fair price does not mean quotas on natural gas production," Shmatko said.

He said, "It's much more important to develop mechanisms of cooperation between producers, transit countries and consumers."

Shmatko also said GECF members would "not discuss the possibility of cutting gas supplies to the market in order to support prices."

"Under the current international gas trading system, the only adequate price-setting formula for gas is one that takes into account prices for diesel and fuel oil," he said.

... Payvand News - 12/03/10 ... --

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