WHAT ARE the prospects for a gas cartel, an organisation of gas exporting countries or Ogec? The unpleasant truth is that they look better every day and not just because Gazprom, the world’s biggest gas exporter is being vocal about its ambition to dominate global gas markets.
With periodic gas shortages and thermal units selling at high prices in Britain and the US, you might think that a gas exporter, such as Gazprom or Algeria’s Sonatrach, has nothing to worry about. There is ample demand and constrained supply. Europe’s big reservoirs of gas in the North Sea are depleting quickly, power stations are hungry and Russia struggles in periods of peak demand to maintain the pressure in export pipes.
Europe needs much more gas, so why should its potential suppliers — Russia, Algeria, Libya, Nigeria and Qatar — risk political opprobrium among consuming nations by combining forces. The answer is fear. Many fear a glut of liquefied natural gas (LNG) and their fear is justified.
Oversupply is building in LNG, a market which is upsetting the old wisdom about gas being a local, disconnected market of rigid long-term contracts between suppliers and consumers linked by pipelines. To everyone’s surprise, a trading market in LNG has quickly emerged in the Atlantic basin where refrigerator ships loaded with frozen gas can alter course to Europe or America, in search of the best price.
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