VIENNA (Dow Jones), Mar. 16, 2010
Natural gas producers may restrict their output to correct oversupply and boost prices, the president of the Gas Exporting Countries Forum said Tuesday, countering skepticism that gas countries can't influence prices the same way as oil producers.
Speaking to reporters ahead of an OPEC meeting here Chakib Khelil, who is also Algeria's oil minister, said if there is a market imbalance "all you need to do is to take back some of your production."
"It isn't a problem to shut-in fields," he said.
The statements are the clearest indication to date of the policies the GECF could discuss when it meets April 19 in Oran, Algeria. Restricting output would be similar to the actions of the Organization of Petroleum Exporting Countries, which has cut or increased production to stabilize markets.
Some gas producers and experts have said cutting output to boost prices would be harder for gas producers than for oil as the majority of the deals are tied to long-term prices.
Arriving in Vienna later, Abdullah bin Hamad Al Attiyah, oil minister for GECF member Qatar, said it is too early to say whether it will cut gas supplies, but agreed prices are currently below their optimum range.
"We feel [the low gas price] is unfair," he said. "We aren't asking for a premium, but price parity for gas with oil."
Members of the GECF have blamed depressed global prices on new gas supplies from U.S non-conventional gas fields.
Last year, the Henry Hub U.S. gas contract was on average 44% lower than in 2008 at $3.99 per million British thermal units. By contrast, Khelil said Tuesday a fair price for natural gas is $13 to $14 per million British thermal units, but didn't specify which particular benchmark contract he had in mind.
The prices have already led some producers to warn they could reign in production. Statoil ASA (STO) said recently it may delay some natural gas output in Norway, the world's third-largest gas exporter.
But Russia, which holds the Forum's secretariat general and is the world's largest gas exporter, has said the GECF has no immediate plans to co-ordinate output volumes and regulate prices.
The 11-member GECF -- which also comprises Bolivia, Venezuela, Egypt, Iran, Libya, Nigeria, Trinidad & Tobago, and Equatorial Guinea -- controls 73% of global gas reserves and 42% of production.
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