The 13-member Gas Exporting Countries Forum will practice supply and demand management to achieve a “fair price,” the group’s secretary-general said.
“Once the majority of gas exporters agree and commit on uniform behaviors in the market, we could be expecting desirable decisions to be made and effective actions to be taken which is in line with the objectives of the forum,” Leonid Bokhanovsky said in a letter, received by e-mail, on the fourth anniversary of the group.
GECF has been less effective than the Organization of Petroleum Exporting Countries, OPEC, which meets twice a year to tweak crude-oil output quotas with the aim of influencing prices, and has been in existence since 1960. GECF’s members, who hold almost 60 percent of the world’s gas reserves, asserted at a summit in November 2011 that they should cooperate to raise prices and boost supply, yet they disagree on how that can be achieved.
Qatar’s Emir Hamad Bin Khalifa Al Thani said at a summit last year that the group shouldn’t try to limit output while Iran’s Oil Minister Rostam Qasemi called for the group to develop a “market management plan.”
The majority of gas is sold in long-term contracts tied to oil and is expensive to transport, making the market for the fuel more regional than crude, which is mainly bought and sold on the spot market. GECF members defended oil-linked contracts at their most recent meeting in Equatorial Guinea Nov. 21.
The volume of gas bought in Europe linked to spot prices may exceed 50 percent for the first time next year, according to Thierry Bros, a gas analyst at Societe Generale SA in London. The majority of Asian gas is bought through oil-linked contracts, while in the U.S. almost all of it is traded on exchanges.
U.S. month-ahead gas delivered to the Henry Hub dropped 75 percent since July 2008, while Brent crude is little changed in the same period.
GECF plans a summit for heads of state in Moscow next year as well as a ministerial meeting in Tehran. Its members are Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Oman, Qatar, Russia, Trinidad & Tobago, Venezuela and the United Arab Emirates. Kazakhstan, the Netherlands, Norway and Iraq have observer status.