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Need for Gas OPEC

As economic and political heavyweights met at the World Economic Forum in Davos last week, energy experts and media outlets once again floated the idea of soon establishing an organization of major gas exporting countries. The subject was first raised by the Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei in 2007, and Russian President Vladimir Putin warmly welcomed the initiative.

Russia and Iran--the world’s two leading gas producers -- alone own 42% of the world’s known gas reserves. Following Iran’s proposal to set up the ‘Gas OPEC’ Moscow held talks with Qatar-home to the third largest natural gas reserves. The three countries have reached consensus over the general outlines of the OPEC-style gas organization. Save for Russia, most of the leading gas producers are also members of the 13-nation Organization of Petroleum Exporting Countries, including Algeria, Iran, Qatar and Venezuela.

Given the key role of energy now and in the coming years, the big gas producers are keen on laying the groundwork for effective cooperation among their respective nations, importers and consumers. The intention is also to help ensure international consumers of stable supplies and set the gas market on the proper course. As things stand now, there is absolutely no coordination of prices in the global gas market. For instance, prices for long-term contracts are fixed directly between producers and consumers. Known as an environmental-friendly and clean source of energy, gas will soon be the most demanded sort after fuel given the unabated pressures of climate change and the obligation of governments to cut CO2 emissions on a large scale within the next decade.

The 21st century has been rightly named after gas. However, talks about founding an organization for regulating the gas market and by extension of its price, have not been sound of music to the western world that rely heavily on energy imports both for their growing industries and heating homes. Although the United States, among other major industrial powers, has strongly opposed the formation of any gas organization, the ascending order of global demand for gas and the outstanding role this fuel will play in the security and progress of nations in the not too distant future has encouraged gas producers to pool minds in a single grouping.

According to figures released recently by reliable statistical bodies, consumption of liquefied natural gas (LNG) has increased almost 100% in the past three years. Natural gas accounts for more than 23% of the world’s energy demand. With the upward trend in international oil and petrol prices, it is strongly believed that almost 50% of global energy demand will be met by gas in near future. Under the conditions, Iran’s initiative to create a special gas organization has been in the limelight of the producing countries since the proposal was first made.

Political pundits and economic experts agree that formation of a gas organization will also help promote global peace and stability. They opine that one way to forge discipline in the complicated energy market should be the creation of a strong and multilateral entity to monitor production, exports and prices. ( Daily)