Three themes have emerged from the gas exporters meeting in Algeria.
- The developing courtship of Qatar and Russia
- Disquiet about Algeria’s idea of forming a gas cartel and gas exporters reaffirming their love of the oil/gas price link
- New countries seeking membership
It is still early days, but here is a collection of interesting quotes – arranged along theme lines – from news wires covering the meeting.
The news about the US refining industry has been nothing but bad for several years now. A key reason, of course, is the economic downturn, although there are others. Meanwhile talk about impending carbon legislation is not helping the mood in this carbon-intensive industry.
Yet perhaps things are turning around. The American Petroleum Institute reported on Friday that US refineries produced more gasoline this March – 9.3m barrels per day – than any previous month on record. And March gasoline deliveries ( a measure of demand) were higher at 9.2m barrels per day – than any previous March.
It’s still too early to tell whether European shale gas will prove the game-changer that it has been in the US. But Bernstein Research analyst Oswald Clint, after a trip to Poland to meet companies operating there, remains unconvinced that the various hurdles already identified will be easily overcome — and adds a few more concerns of his own.
And if it does work, he says, the theoretical production rate could have difficulty ramping up:
Members of the Gas Exporting Countries Forum are meeting in Oran on Monday. But even with natural gas prices falling and concerns about the US production glut, the get-together still looks unlikely to generate any consensus on introducing production quotas.
The idea of a ‘gas Opec’ has been around for years, with Russia and Iran signalling interest back in early 2007. Algeria, which was opposed to the idea back then, has become much more keen on production limits as the gas price has plummeted relative to crude oil. In February Algerian energy minister Chalkib Khelil called for production cuts to bring gas in line with an ‘ideal’ price of about $13 – $14 per mBTU (about four times what it is now) saying he would propose it at today’s meeting.
An interesting chart from the Schork Report:
On the face of it, however, not really a big deal: equity markets around the world fell in response to the news, and the strong correlation of crude oil prices to equity markets and various macro indicators is quite well-established these days.
Could there, however, be a bigger effect from the Goldman SEC charges down the track?
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