Europe to become more dependent on Middle East gas after 2010

Mar 21, 2002 01:00 AM

Europe is to become increasingly dependent on middle-eastern gas beyond 2010, especially production from Qatar and Iran, the president of Nalcosa, former Algerian oil minister Nordine Ait-Laoussine told a conference in Amsterdam.
He said Europe would only remain oversupplied until 2005 and that beyond this point, it would be in deficit. He strongly criticized the European Union for not talking to producers in its regulation of the European market. He said if the EU continued to do this, producing companies would "resort to a defensive strategy." "The forum of gas exporting countries should be seen as the first sign of this defensive stance," he said.

He said the Gas Exporting Countries Forum (GEFC), which first met in Tehran last May, could become a cartel and play a role similar to that of OPEC in the oil markets. In a frank briefing of the organization's intentions, he said "if gas prices collapse to below cost, do you expect producing countries to subsidize exports?" He noted that if take-or-pay was abolished as part of liberalization, then the producer would be as free as the buyer.
Ait-Laoussine indicated the creation of the GEFC may already be influencing the EU. "I understand there has been a change in tone from the European Commission. Whether this is due to the creation of GECF, I don't know." He suggested more investment partnerships between sellers and buyers in a liberalized environment may solve some of the problems that could face producers, of increased risk and reduced margins.

Source: Platts
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