Meeting of LNG exporters alarms some U.S. consumers: Report

As speculation on a new energy cartel swirled around the meeting last week in Trinidad of officials of the world's leading liquefied natural gas (LNG) exporters, experts said that the control dynamics just aren't there for countries with exportable natural gas to set production and price targets in the same manner as the Organization of Petroleum Exporting Countries (OPEC, Natural Gas Intelligence (NGI) reported Tuesday.

"OPEC is dealing with a very large percentage of the world's oil production. LNG is a very tiny percentage by comparison of the world's natural gas production. So the ability to influence the market by how you manage LNG is questionable to say the least," Gordon Shearer of Poten & Partners said in an interview with NGI. "I just don't see the precursors there that you had for OPEC."

Nevertheless, the meeting of officials from Trinidad, Iran, Algeria, Malaysia, Brunei, Libya, Egypt, Bolivia, Indonesia, Venezuela, Oman, Nigeria, Qatar and the United Arab Emirates, which are members of the four-year-old Gas Exporting Countries Forum, alarmed some gas industry officials in the United States.

LNG is a rapidly growing source of U.S. energy supply. U.S. LNG imports soared 29% last year to 652 Bcf and Trinidad made up 71% of the total. While LNG still only makes up about 3% of total U.S. demand, the Department of Energy is expecting LNG imports to grow another 12% this year to 730 Bcf, and make up more than 20% of total U.S. gas supply by 2025, with imports of 6.4 Tcf.

"We're very concerned about it," said David Schryver, vice president for congressional affairs at the American Public Gas Association (APGA). "It seems like we're going the way of oil and OPEC. We don't want other countries setting a price for us particularly when we have sufficient gas at home that's being kept off limits."

APGA has sent letters in recent weeks to Federal Reserve Chairman Alan Greenspan, President Bush and to administration officials urging them to advocate opening areas where oil and gas drilling currently is off limits rather than focusing on importing more LNG.

"Certainly LNG needs to be a component of any energy policy, but when you increase percentages significantly more than where they are currently I think we're just setting ourselves up for more dependence on foreign fuel and decreasing our domestic energy security," said Schryver. "We think it's a real threat." (*)