Establishing a group of gas exporting countries will help harmonise pricing formulas and bring security to the growing market for the fuel, a senior Iranian gas official said. World gas powers Iran, Russia and Qatar met in Tehran last week and said they would strengthen co-operation.
Iran said consensus was reached to set up an Opec-style group, drawing criticism from the European Union about setting up a cartel. Analysts say a gas body would not be able to turn gas taps on and off like the Organisation of the Petroleum Exporting Countries does with oil, but could share insights on upstream contract terms when it deals with gas industry investors.
"Perhaps this organisation will not exactly be a copy of Opec but the aim underlying this organisation will be co-ordination between gas exporting states," Reza Kasaeizadeh, managing director of National Iranian Gas Export Company, told Reuters on Sunday, adding it should not be called "gas Opec." "It is an organisation that will put effort toward market stability, market security and in the direction of the interests for both consumers and producers," he said.
Iran, the No 2 oil producer in Opec, sits on the world's second biggest gas reserves and has been one of the strongest advocates of setting up a gas version of Opec even though it now imports roughly as much gas as it exports. "The initial effort will not be for a common gas price since gas contracts are long-term in nature and have already been signed. Generally gas contracts are regional," Kasaeizadeh said in an interview in NIGEC's headquarters in Tehran.
"But what is seen as important is the gas price formula, and this formula can enjoy a common basis," Kasaeizadeh said. "Gradually this role (of co-ordination) will have to be implemented in a way that ultimately will bring gas supply security and it will examine the gas price basis and its relationship with the oil price," he added.
Gas consumers like the United States and European states have opposed the formation of any gas body like Opec, arguing that the market rather than any cartel should set prices. When the three gas powers met in Tehran, Russia's gas export monopoly Gazprom said they had agreed to form a "big gas troika", which should become a permanent body holding regular meetings.
Senior executives of two of Europe's biggest gas distributors, GDF Suez and E.ON Ruhrgas, have played down the prospect that the new body could act like a cartel and said such a body could be useful. The Islamic Republic aims to grab 8-10 percent of the world gas market by 2025. However, officials says US and UN sanctions are hindering, although not stopping, export plans.
Wary of sanctions, big Western energy firms with gas technology and expertise have scaled back investment plans. The UN Security and United States have slapped sanctions on Iran because of its nuclear work, which the West says is aimed at building nuclear weapons. Iran denies this, saying it wants to make electricity and save its oil and gas for export.
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