Gas exporting countries convene as global buyers’ market rises
Top officials of major gas producing countries gathering this week in Bolivia will face a harsh reality: Expanding supplies of the fuel are giving global buyers greater sway over purchase and contract terms.
This week’s Gas Exporting Countries Forum (GECF), which aspires to be the OPEC (Organization of the Petroleum Exporting Countries) for natural gas suppliers, is expected to draw energy ministers from Qatar, Iran, Russia and Venezuela to Santa Cruz, Bolivia as market oversupply reduces revenues, Reuters reported.
These countries increasingly are competing with exports from and prices set in the United States, which is on track to become the world’s third-largest exporter of liquefied natural gas (LNG) after Qatar and Australia.
That has “buyers in a better position to make contracts with shorter terms and more customized to their demand profile, without risking money in high take-or-pay clauses”, said Mauro Chavez, a senior research analyst at consultants Wood Mackenzie.
At least 25 countries are now capable of receiving LNG supplies and new regasification plants are expected to start operating in the coming months, giving buyers greater flexibility and increasing competition for suppliers.
Even though LNG represents only about 10 percent of the world’s gas trade, new suppliers are willing to offer sweeter terms to customers, roiling traditional markets and turning up the heat on some producers trying to hold onto more rigid terms.
The United States has been the most aggressive in shaking up the market, through flexible contract terms.
US suppliers such as Cheniere Energy, the largest country’s LNG exporter, are allowing customers to resell cargoes, which has created a profitable market for trading houses.