Interview: Mohammed Al Riyami, Head of Gas Market Analysis Department at GECF

In 2001, 11 of the world’s big gas producers created the Gas Exporting Countries Forum (GECF). Russia, Iran and Qatar, plus Algeria, Egypt, Bolivia, Equatorial Guinea, Libya, Nigeria, Venezuela and Trinidad and Tobago control more than 70% of the world’s natural gas reserves, and 85% of the world’s liquid natural gas production. Natural Gas Europe had the pleasure to speak with Mohammed Al Riyami, Head of the Energy and Gas Market Analysis Department at the GECF. While Russia is trying to flex its muscles, we tried to shed light on GECF’s role. Will the organisation mimic OPEC? Will it have a similar function? These are the questions we asked to Al Riyami.

During a recent congress, you said that the gas prices are likely to remain somehow pegged to oil prices, because many long-term contracts will expire in 5-10 years. 

I said that oil indexation still remains to be dominant in the energy markets because contracts are already in place. So you can’t really wipe them out. Of course, you are going to have a lot of other contracts.

Don’t you think that eventual renewed long-term contracts could pave the way to LNG terminals and other capital intensive projects in the Mediterranean – let’s say Cyprus and Israel?

Sometimes spot prices can be even more expensive than oil-indexed prices. By having an oil index, this reduces the risk. When you build a LNG plant you need to give the dividends back. Having the oil-indexation makes a lot of sense to the bankers. 

In this sense, you are giving more fixed points for competitors to take their business decisions. Don’t you think that you are giving more certainties to competitors?

No, no, no. I don’t think so. Gas price goes up and goes down. Oil price goes up and goes down.

In this context, what is the role of Saudi Arabia? Do you think that the same could apply to Saudi Arabia?

I cannot speak for Saudi Arabia. 

Do you expect any change of your organisation? Do you see your organisation to increasingly resemble OPEC? 

Ours is a centre of data exchange. We share information. Basically what we want to do is to promote gas. And this is actually very good because gas is a clean energy. 

Does it not go against what Russian President Vladimir Putin said? Is not in Russian interest to push forward an OPEC-style gas cartel?

I cannot comment on those points, but the statute is very transparent and this is where we are. Our role in the future is anybody’s guess. We are very much into sharing information and promoting a dialogue.

Is there any event that could change the cards on the table? Do you see any event that could trigger a change of direction of the gas industry? 

I think technology efficiency will have a major impact. 

Sergio Matalucci