Participants in the Forum of Gas Exporting Countries meeting in Wahran, Algeria agreed to both raise gas prices and to link them to oil prices after the former fell on global markets from US$13.69 per million thermal units (mtu) in 2008 to US$4 per mtu this year.
Profits fell drastically due to a reduction in prices by liquid natural gas exporters hoping to get rid of surplus stocks that had been declined by the US.
Algerian Energy Minister Shakib Khalil said in press statements that when an OPEC member state reduced its oil production, other member states do not necessarily increase theirs.
“In the gas market, however, the US and Australia are not members of the gas importing countries, so they can increase their production, sell at their own prices and affect the sales of the rest,” he explained.
“That’s why we decided to link our prices to those of oil,” he said, adding that the forum called on gas importing companies to invest in gas-related projects in export countries. “In return, exporting countries will invest in transportation and distribution facilities in importing countries.”
“With oil prices hitting US$85 per barrel, the acceptable price for gas should be US$11 per mtu,” Khalil added.
Egyptian Oil Minister Sameh Fahmy, for his part, explained that oil prices were determined by the relative quality of the crude, while gas prices depended on consumer demand.
Gas is sold under long-term contracts, experts point out, making it difficult to change prices due to market fluctuations.
Translated from the Arabic Edition.