Gas exporters forum not a pressure group: Report

The Gas Exporting Countries Forum, which is now holding its second meeting Algiers, is not a pressure group, but it could turn into a fully-fledged organization similar to OPEC (Organization of Petroleum Exporting Countries), according to delegates.

"We aren't a pressure group," Dow Jones newswires quoted a delegate as saying in response to a question on whether gas producers have formed the association to lobby against European Union plans to liberalize the region's gas market.

Gas-producing countries are concerned that the rise of the short-term gas market in Europe will chip away at traditional long-term take-or-pay contracts, which producers say are crucial to funding their gas strategies.

Under take-or-pay contracts, gas buyers must agree to use all of the gas under contract or pay for the amount unused.

There has been an impasse between the E.U. and its chief gas suppliers, Algeria's Sonatrach and Russia's Gazprom OAO, over destination clauses.

The delegate said to date, the GECF hasn't lobbied against the E.U.'s liberalization initiative, and it was unlikely that the group would act on this matter in the future. A Middle Eastern delegate said the GECF could eventually become "an organization" similar to OPEC.

The GECF doesn't currently have the infrastructure that OPEC does, such as a secretariat, nor does it charge membership fees, but he said due to the importance of gas as a fuel of the future, the GECF could possibly form a headquarters and secretariat.

Several delegates said a working group of experts, headed by Iran, have been working since May 2001 to implement various projects which were agreed upon during the forum's first meeting in Tehran.

One delegate said these projects are aimed at the global gas demand-supply balance and the security of gas supplies.

Delegates said they expect GECF membership to continue to grow in the coming years, but added that many gas-producing countries are nervous about being associated with a body equivalent to OPEC.

Gas-producing heavyweight Canada declined an invitation to attend this week's talks. A delegate said there is uncertainty over why Canada isn't attending. Algerian Energy Minister Chakib Khalel recently said he planned to invite Canada to the meeting.

Energy ministers and delegates are scheduled to arrive in Algiers Thursday and early Friday for the meeting, which will take place Feb. 1-3.

GECF membership has risen to 15 from the inaugural 11. Seven ministers attending are from OPEC members: Iran, Qatar, Nigeria, Algeria, Venezuela, Indonesia and Libya. Also attending are Oman, Norway, Russia, Malaysia, Turkmenistan, Brunei, Colombia and Egypt. One source close to the talks said Canada is expected to join the group eventually, and membership is expected to continue rising, embracing consuming countries as well.

The 15 countries represented at GECF sit on proven gas reserves totaling 106.68 trillion cubic meters, out of a world total of 150.19 tcm, said BP's (BP) Statistical Review. Russia's reserves rank top with 48.14 tcm, followed by Iran with 23 tcm. (*)