Why a Gas Troika and cartel will prove to be hot air…

Despite endless media speculation that the world is about to witness the formation of a gas ‘OPEC’ spearheaded by a ‘troika’ of Russia, Iran and Qatar, such speculation is vastly overblown. Russia is currently working on a draft charter for the Gas Exporting Countries Forum (GECF) to sign off on in late November 2008 before the forum next meets towards the end of the year.

Such developments will no doubt be written up in the media as a further step towards a fully fledged cartel, but in reality, any process of cartelisation remains a highly unlikely process due to structural impediments and geopolitical divides between producer states. This is not only the case for the nascent troika, but more fundamentally, for the whole concept of a Gas Exporters Country Forum.

What the GECF is, and indeed, isn’t

Despite the endless column inches playing up the prospects of the GECF, behind this veneer of structural co-operation resides a highly informal grouping of states, with membership fluctuating since its formation in 2001. Its core membership comprises Algeria, Bolivia, Brunei, Egypt, Indonesia, Iran, Libya, Malaysia, Nigeria, Oman, Qatar, Russia, Trinidad & Tobago, the United Arab Emirates (UAE), Venezuela, Equatorial Guinea, and latterly Norway in an observer capacity. These countries account for over 70% of the world’s gas reserves and over 40% of production, leading many analysts to suggest that there are already a sufficient number of producers to form a price-setting cartel. In Datamonitor’s view, such analysis is misplaced.

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