The Gas Opec is worried....

It sounds like the nice simple story some people, especially lazy journalists like to hear, easy enough to add their spin and sell it on.

The story is a Gas Exporting Countries Forum as a methane powered OPEC, someone bulls can simply point to and blame for natural gas prices.  At the same time, they serve a valuable (to long term price consultants and energy bulls in general) purpose in pushing up prices.

But they sound much more worried about stopping further price falls and demand destruction. Shale gas (yawn) is important to them, if not to our UK energy bulls:

Trinidad and Tobago Energy Minister Conrad Enill said today the growing role of shale gas in the US market was one of the main concerns discussed in a meeting of gas exporting countries.

"...what we were talking about, the entrance of shale gas into the US market," Reuters quoted Enill as saying on the sidelines of a meeting of the Gas Exporting Countries Forum in Doha.

"How is that going to impact the business in the future...how do we maximise production, how do we ensure the business grows, how do we ensure in growing the business we maintain price stability."

Note already one big difference between OPEC and GECF: The gas group is more interested in maintaining prices, not increasing them.  They realise already that increasing price is not an option.  T+T have a right to be worried. The big producer there is BG, who have made Trinidad and Tobago one of the world's largest gas exporters. But BG, descended from British Gas many years ago, is one of THE players and have a great track record strategically in creating the LNG market from scratch from Trinidad into both the US and world markets, while growing in Australia on Coal Bed Methane, and then lucking out (or was it skill?) on this century's mega discoveries offshore Brazil.

But BGs newest investment, although playing follower to Statoil Hydro, BP, Eni and Shell, is going to get the GECF more worried. Don't worry where BG's investment currently is. Worry about where the technology they learn there takes them next:

BG Group plc the U.K.’s third- largest natural-gas company, bought assets from Exco Resources Inc. for $1.06 billion to develop its first U.S. shale gas project.

We expect BG will use this shale gas to meet U.S. contract commitments, thereby releasing Atlantic basin LNG cargoes for higher priced global” markets, said Oswald Clint, a London-based analyst at Sanford C. Bernstein & Co.

It's hard to see where those higher priced commitments might be, given the role of Qatari, Equatorial Guinea, Gazprom in Sakhalin, Gazprom in Yamal, Algerian, Egyptian, Libyan, Australian, Brunei, Indonesian and Norwegian LNG in chasing supply markets that declined 8% last year.  And if BG learn some technological lessons, as they surely will, then there will be more shale worldwide to add to the pot.

 

Comments

[Roger from Solar Power Facts]

The big thing oil has on its side is its use in military hardware, and it is this that ensures it will play a crucial role for many years to come (unfortunately). Gas is a more domestic fuel, or so it seems to me.