Russia does not plan to cut natural-gas production to support plummeting prices after Algeria suggested the Gas Exporting Countries Forum should seek to limit supply when it meets this month. “That is not possible,” energy minister Sergei Shmatko told reporters today in Moscow when asked about reducing output. The 11-member Gas Exporters Countries Forum is due to meet in the Algerian city of Oran on 19 April.
While some analysts have dubbed the group “Gas Opec,” it differs from Opec because it does not set output quotas. Members should agree to cut production to bring supply and demand into balance, Algeria’s energy and mines minister Chakib Khelil said last month. Prices in the UK spot market are more than 50% lower than those in the rest of Europe, which tend to be multiyear contracts linked to oil prices, Didier Houssin, director of the International Energy Agency’s directorate of energy markets and security, told Bloomberg on 6 April.
That difference will likely widen as oil advances, according to Houssin. Gas contracts linked to crude tend to trail oil with a lag of several months or more. Brent crude has gained 8.9% since the start of the year. Next-month gas at the U.K.’s National Balancing Point has dropped 8.2% this year. The current fall in spot prices won’t hurt the multiyear contracts by which Gazprom, Russia’s gas export monopoly, sells gas to Europe, Shmatko said in a presentation today in Moscow. Full-time members of the Gas Exporting Countries Forum are Qatar, Algeria, Bolivia, Egypt, Equatorial Guinea, Iran, Libya, Nigeria, Russia, Trinidad & Tobago and Venezuela.
