| CAIRO, June 2
CAIRO, June 2 Natural gas producers must boost
capacity to meet rising demand for the cleanest fossil fuel but
need reliable long-term contracts with users to do it, members
of the Gas Exporting Countries Forum (GECF) said on Thursday.
After a few years when capacity increases in exporting
countries caused global oversupply and plunging prices, the
market has now tightened following Japan's nuclear power plant
crisis, political turmoil in the Middle East and rapidly rising
demand from new consuming countries.
Many analysts say the gas glut that has blighted exporters
since former major importer the United States became self
sufficient will soon vanish because of a dearth of new supply.
But the group of some of the world's biggest gas exporters
says consumers must commit to buy the low-carbon fossil fuel
over the long term.
"Large infrastructure and upstream projects are the key to
fulfilling the projected long-term demand supported by long-term
contracts, which are the basis of gas markets," Leonid
Bokhanovsky, GECF secretary general, said at the opening of the
first group meeting since a tsunami smashed into the Fukushima
power plant in Japan in March.
Previous meetings of the GECF have been dominated by
discussions about how to soften the impact of a shale gas boom
in the United States on those that had hoped to sell large
quantities of gas to the world's biggest economy for decades.
But demand from emerging markets like India and South
America is rising rapidly, while Japan has become more reliant
on gas since the shutdown of some nuclear plants in the wake of
Fukushima -- a crisis that prompted others to review nuclear
plans and look to gas as an alternative low-carbon fuel.
"The expected increase in global gas demand means that
considerable new gas production capacity will have to added,"
Egyptian energy minister Abdullah Ghorab said. Exporters could
not be expected to spend tens of billions of dollars on new
infrastructure without some committment from consumers, he
"Flexible pricing formulas and contractual mechanisms that
allow frequent review are required to keep a continuous balance
among all concerned parties that will allow maintaining a fair
and sustainable relationship between sellers and buyers," he
told the opening session of the meeting in Cairo.
When supplies were ballooning and prices sagging last year
some gas market observers feared the GECF could try to mimic oil
exporting group OPEC by cutting supply to push up prices.
But GECF members said late on Wednesday there was no need to
consider cutting output of natural gas and any extra supply in
the market would soon be gobbled up by growing demand.
(Writing by Daniel Fineren)