Clean gas should have premium on price

News code : ۲۶۹۱۰۹

ILNA: Gas Exporting Countries Forum(GECF) Secretary General Mohammad Hossein Adeli has spoken about the need for a “premium on gas” because of its clean nature and said all of the producers are in favor of that.

On the oil - indexed gas price, he said, “Yes – all of our countries more or less agree with this, ” he said in an interview featured by Gulf Intelligence and carried by Gulf Times.

“There is also a need for a premium on gas because of its clean nature and this is why all of the producers are in favor of that. But this does not mean that they’re not following the market pragmatically; what’s happening now is that of course the price has been fluctuating, but not to the extent that prices would deter sustainable investment and supply, ” he said.

Regarding the talk in Asia about a buyer’s cartel to come together in order to try and reduce the premium that the Asian buyers pay for LNG, Adeli said it is too soon to comment.

On the impact of creating a buyer’s cartel to get better leverage on gas pricing(on Qatar and other producers), Adeli said, “There are two things that differentiate gas from oil. One is, its very nature vis - à - vis oil, and the second is that our statute at GECF has no intention of setting prices, quotas or production ceilings.

“But Qatar is another producing country. They are in a good position actually because they have demand from the East and recently from the West. Qatar also has the policy of moratorium; they have stopped increasing production and as far as I know, this is going to be their policy up to ۲۰۱۸. If they continue this policy of a ceiling on production, then with the increasing of demand, prices will hold. ”

In view of the expected drop in long - term gas demand from Western Europe, along with diversification, energy saving initiatives there etc, will the momentum now increase as a result of nervousness about long - term supplies from Russia?

On Europe, Adeli said “there are a couple of things”. Firstly, Europe’s economy is not picking up and was hit by the financial crisis, so the demand for gas and energy has slowed.

On the other hand, because of cheap coal coming from the US, the demand for gas has also slowed down with the energy mix in Europe now having less gas and more coal.

”Wasn’t it a bit concerning from an environmental standpoint? ”, Adeli said, “Yes because the Europeans have the highest commitment to environmental concerns and given the fact that there are negotiations now on the second phase of the Kyoto Protocol, in ۲۰۱۵ you’re going to have a meeting to finalize all of these ceilings on greenhouse gas emissions. So from that point of view, there are problems.

“And I think that Europeans have not yet come to their own decision what they want to do with the energy policy and their energy mix. This is a big question mark for Europe.

“On the other hand, there is this partnership with Russia. Diversification of supply for Europe is not a new phenomenon; it’s been going on in Europe for the past ۳۰ years but it’s important to see how the partnership with Russia will continue. But I’m optimistic, because of the interdependence of both these sides and the huge infrastructure, which is already in place. ”

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