The prospect of an active spot market in liquefied natural gas is raising fears that major gas exporting countries could in the long term form an OPEC-like cartel to control prices.
Australia, as a major LNG exporter, could benefit from any cartel supporting higher prices, even if it is almost certain never to become a member.
Members of the Gas Exporting Countries Forum (GECF) are meeting in Doha, Qatar, this week and while a gas cartel isn't on the official agenda, Iran and Venezuela have both talked up the prospects.
Australia isn't a member of the forum, which is made up mainly of Middle Eastern states and Russia.
Forum member Algeria has warned that a gas cartel is barely feasible in a market dominated by long-term contracts linked to oil prices. But Algerian Energy Minister Chakib Khelil said the forum could still appoint experts to look into it.
"The only time you are going to have some kind of gas OPEC is when you have a very liquid market. Lots of liquefied (natural) gas and so on," he said.
But analysts are sceptical of any gas cartel emerging. "I see very little scope for it (GECF) to become much more than a talking shop. I don't see how they can work together. We don't have a global gas market," LNG consultant Andrew Flower said.
LNG is a growing export earner for Australia as the North West Shelf project ramps up shipments to Japan and China, and Conoco-Philips of the US last year started up its smaller Darwin LNG project.
The Australian Bureau of Agricultural & Resource Economics forecasts Australian LNG production to jump more than 20 per cent in 2006-07 to 15.2 million tonnes, worth $5.4 billion in export income. That is more than either grain or beef, and more than double Australia's export earnings from wool.
With other projects on the agenda, such as Chevron's Gorgon development offshore from northwestern Australia, ABARE is tipping Australian LNG exports to rise to 25.1 million tonnes by 2012, overtaking oil exports for the first time to generate $9.6 billion in income.
Giving impetus to talk of a cartel are moves by Qatar to launch an LNG trading contract. A traded contract in LNG would pose a new challenge to gas-exporting countries, with the arrival of liquidity and price transparency in an opaque market.
Qatar is pushing the contract as a way of gaining increased market access for its own rising LNG production. Its North Dome field is the largest gas reservoir in the world. Qatar expects to export 30 million tonnes of LNG next year, about a third of the world market. Projects are under way to more than double that capacity.
The global trade in LNG is on the rise as countries increasingly turn to gas as a secure and more greenhouse-friendly energy source.
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