A conference in Doha in Qatar on processing natural gas is debating initiatives to stop aligning the price of gas with that of oil. The hope is to expel volatility from the gas market.
Dr. Gennadi Shmal is President of the Russian Oil and Gas Industries Union:
"At a time when the role of gas was subordinate, the alignment was useful and logical. But at a time when natural gas is every bit as important as oil, it is counterproductive. Natural gas must be priced separately and at separate exchanges for this. Russia proposes a trading floor in St Petersburg or in the Arctic Siberian port of Salekhard. It believes its position as a producer of one quarter of the world's gas makes it the right host for the exchange".
A few months ago, this country started liquefying natural gas, at a plant in Sakhalin in the Russian Far East. Companies in Japan, the United States and South Korea have already taken out 25-year subscriptions to produce from the Sakhalin plant. One more such facility, to be built on the Barents Sea, will be producing LNG for export to Europe and the United States. The role of LNG is set to grow, which further increases the need for the proposed international exchange for gas trade. The Russian gas official Leonid Bokhanovski says he is going to use his stint as Secretary General of the Gas Exporting Countries Forum, with headquarters in Doha, for starting concrete work to establish a gas exchange.
The Forum meantime is gaining clout and may one day overtake its oil counterpart OPEC, in terms of both production and influence. The prospect is very real, particularly if the member states Qatar and Iran follow Russia in expanding their gas industries.
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