Gas Exporters Meet Opec Members to Swap Ideas
Members of the oil exporters' cartel Opec met their counterparts at the Gas Exporting Countries Forum (GECF) for the first time virtually November 4. In a joint statement, they talked of "growing co-operation between the two organisations under the framework of the Opec-GECF Energy Dialogue."
As with oil, LNG markets have been oversupplied even before the onset of the Covid-19 pandemic, so producers will be looking at ways of cutting production to support prices. Opec and Russia meet regularly to agree output cuts for crude.
The two organisations signed a memorandum of understanding in October last year "to promote the “exchange of knowledge, experience, views, information, data and practices in areas of mutual interest.”
Secretary-general of GECF Yuri Sentyurin said the "well-established Opec-GECF energy dialogue serves as a foundation for the realisation of valid policies that serve as a framework for international collaboration, and guarantee the much-needed security of supply and demand for oil and natural gas.”
“Although the current market conditions and lockdowns are multiplying throughout the world, we believe that oil and natural gas industries will always be an essential element in achieving a low-carbon energy system globally and regionally and that they will support the post-pandemic economic revitalisation,” he said.
The meeting focused on the impacts of the Covid-19 pandemic on global energy markets in the short-, medium-, and long-term, recognising that the fallout on the energy markets and the global economy was unprecedented. Both parties underscored the importance of crude oil and natural gas to the world economy, as the two commodities, together, will continue to account for more than half the global energy mix.
Algeria, Equatorial Guinea, Iran, Libya, Nigeria and Venezuela are members of both while Opec members Angola, Iraq and the United Arab Emirates are observer members of GECF. Some major LNG producers who are members of the Organisation for Economic Co-operation and Development, such as Australia and the US, are prohibited from joining cartels.
When the GECF was set up, gas contracts were still mostly long-term and oil price indexed and so any curtailment of supply to prop up prices would have violated the sales contracts. Since then there has been a decisive shift towards spot pricing and short-term contracts, giving producers more discretion in their output than before.
The next such dialogue will take place in 2021, if possible in person, in Doha, the two groups said.