Save for later Print Download Share LinkedIn Twitter The LNG market oversupply situation could happen again. This raises the question of Opec-style coordination to re-balance the global gas market, Russian Energy Minister Alexander Novak wrote in a magazine published this week by the ministry. He said the Gas Exporting Countries Forum (GECF), where Russia is a key member alongside Qatar, can undertake that coordination role. The GECF has insisted recently that it is not going to do so. It said it will not become a “gas Opec" (LNGI Jul.16'20). “There are Opec-like capabilities within the GECF to create coalitions and [reach] agreements for the re-balancing of the market. If needed, these instruments can be applied,” Novak said. Novak and other Russian state officials have repeatedly said over the past several months that Opec-like gas market coordination by GECF could have prevented the sharp drop in spot gas prices to record lows this summer. GECF Secretary-General Yury Sentyurin, however, told Energy Intelligence in a recent interview that the organization has no intention to collectively reduce gas and LNG production to balance the market during any potential oversupply (NC Aug.13'20). The Doha-based GECF unites 11 member states and nine observers and mainly focuses on the exchange of experience and information. Moscow’s frustration with the low gas prices is understandable. The state-run pipeline gas exporter Gazprom is seeing export revenue halving this year from last year’s $40 billion, and export volume falling 15% from last year’s 199 Bcm, due to low prices and higher competition from LNG (LNGI Sep.9'20). When reporting its second-quarter results in late August, Gazprom said that a lack of an effective balancing mechanism similar to Opec-plus was one of the reasons that, in a situation of a sharp demand drop, spot prices fell to levels below the marginal cost of supply for any gas producer. Earlier this week, Gazprom Export chief Elena Burmistrova said it was LNG that contributed the most to the destabilization of the market in Europe, Gazprom’s key export destination. In sharp contrast, earlier this week Novatek's boss Leonid Mikhelson welcomed low LNG prices (LNGI Oct.12'20). Overall, Russia’s LNG exports look strong in terms of volumes, although revenues are under pressure from lower prices. Vitaly Sokolov, Moscow
