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The African Genie uncorked |
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by Neil Ford | African Business
For many years, hydrocarbon wealth in Africa and elsewhere meant just one thing – oil. Over the past decade, however, gas has become such a popular fuel as a feedstock in power generation and in petrochemical production that most of the world’s major oil producers have reassessed their reserves of natural gas. Africa is no exception, with both piped and processed gas exports rising steadily year on year.
While oil producers’ cartel OPEC is able to manipulate or stabilise prices – depending on your point of view – there has so far been no similar organisation in the gas sector. The long-term nature of most gas deals would make it difficult for such a body to function. Oil prices fluctuate on a real time basis and vary relatively little across the world, while the local conditions of gas production and supply have far more impact on gas prices.
Now, however, a gas producers’ organisation has been set up to help coordinate the work of major gas producing nations. Although the organisation has taken on a name reminiscent of OPEC, it is unlikely to become a second OPEC, as few producers will be willing to curtail production in order to maintain prices. African producers Nigeria, Algeria, Libya and Egypt are joined in the Gas Producing and Exporting Countries (GPEC) by the world’s biggest gas powers, Russia, Iran and Qatar, plus Brunei, United Arab Emirates, Trinidad and Tobago, Venezuela, Indonesia, Malaysia and Oman.
The establishment of GPEC seemed unlikely even as recently as May last year. In that month, Abdullah bin Hamad Al Attiyah, the minister of oil in Qatar, which is set to become the world’s biggest LNG producer by 2010, said that he thought the creation of such an organisation was unlikely. Producing states must, however, believe that there is something to be gained by cooperation.
It is not entirely certain what role and functions GPEC will perform, but the creation of the new body seems to provide further evidence of the importance of the gas industry to the global economy.
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