A natural gas OPEC, or an attempt to scare markets?

Five of the world’s leading producers of natural gas, Venezuela, Algiers, Qatar, Iran and Russia will be launching the “gas OPEC” during the next energy conference scheduled for April 9 in Doha according to a report from the Russian newspaper Kommersant, quoting Arab diplomatic sources.

The meeting of the Forum of Gas Producing Countries, which has been long agreed, will become the moment to announce the creation of the natural gas cartel, adds the newspaper.

The founding countries of the new group are to be Venezuela, Algiers, Qatar, Iran and Russia according to the Russian daily that adds recent quotes from leaders of these countries advancing such a purpose.

However market analysts and natural gas brokers believe the creation of a gas OPEC is almost impossible since market conditions are far more rigid than with oil.

Natural gas is quoted in world financial markets, but this only refers to a very small share of the overall market since the commodity is traded mostly on bilateral client/supplier long term contracts, and commonly linked to oil prices.

Besides natural gas is highly regionalized since it’s difficult to transport contrary to what happens with petroleum.