The summit meeting of the heads of state of the Gas Exporting Countries Forum (GECF) was held in the Iranian capital, Tehran, as a result of which Tehran turned into a hub for delineating the future road map of the global gas industry.
By Mehdi Hassanzadeh
The summit meeting of the heads of state of
the Gas Exporting Countries Forum (GECF) was held in the Iranian capital,
Tehran, as a result of which Tehran turned into a hub for delineating the
future road map of the global gas industry. This was made possible due to the
presence in the summit of high-ranking officials from 18 member states,
including 12 main and six observer members. Natural gas, as the cleanest form
of fossil fuels, is currently accounting for 25 percent of the global fuel
basket. However, current estimates show that due to its low risk of pollution,
this fuel will see the most rapid growth in consumption among other forms of
fossil fuels, including crude oil. On the other hand, due to possessing 42
percent of the world’s natural gas production and accounting for 67 percent of
the world’s natural gas reserves, 38 percent of gas transfer through pipeline
and 85 percent of global gas trade in the form of liquefied natural gas (LNG),
the member states of the GECF can be considered as the world’s unrivaled gas
power.
Image Attribute: World Leaders at GECF Summit 2015, Tehran, Iran / Source: AFP
In the meantime, about 44 percent of global
gas reserves and more than half of the gas reserves of the GECF is under
control of two member states of the Forum, that is, Iran and Russia. The two
countries have established a strong alliance as a result of efforts they have
made to strengthen their strategic relations, and a
recent two-hour meeting between the Leader of Iran's Islamic Revolution
Ayatollah Seyyed Ali Khamenei and the Russian President Vladimir Putin in
Tehran was a good evidence to this fact. The strong alliance between these two
countries can be also of value to the entire GECF and on its own can reduce the
weight of countries that oppose this alliance, including Arab countries like
Qatar and the United Arab Emirates, both members of the GECF, thus preventing
the bitter experience of the Organization of the Petroleum Exporting Countries
(OPEC).
In addition, in order to boost its own
impact, the GECF needs to put up a more serious presence in important global
challenges related to natural gas economy. Two serious challenges that face the
global gas market include the issue of pricing and development of gas industry.
The natural gas industry is currently being challenged by a new rival in the
form of shale gas from the United States. At the same time, global goals and
the international consensus reached at the level of all world bodies to fight
air pollution and reduce greenhouse gas emission show that natural gas plays an
important role not merely as a source of income for countries possessing
natural gas reserves, but also as a serious option for the reduction of air
pollution across the globe. And in doing this, the world needs those countries
that are in possession of abundant gas reserves.
On the other hand, pricing of natural gas is
also faced with a serious challenge. Of course, setting a price for this
product cannot follow a similar trend all across the world due to its special
characteristics, including limitations facing gas transfer, the regional nature
of gas markets and also the need to take advantage of pipelines in order to
transfer gas, all of which require gas-rich countries to get the cooperation of
their neighbors in this regard. On the other hand, due to the growing
production of LNG, which can be transferred in the same way as crude oil,
dependence of gas price on oil price, the impact of wide fluctuations in oil
price on gas market, and also because of the fact that gas will overtake oil in
terms of global consumption in the near future, gas exporting countries must
make efforts to come up with new formulas for setting the price of natural gas.
This is why the final statement of the GECF summit in Tehran not only
underlined the existing risks that emanate from the current gas pricing method,
which is based on the global oil price, but also emphasized the need to achieve
a fair and logical price for natural gas.
The secretariat of the Forum has also
formulated a global gas model, which provides member countries’ ministers with
medium- and long-term perspectives of the world’s gas market, including
forecasts on price and demand and other issues that can provide the needed
ground for policymaking and planning. In this way, gas, as the main option for
fighting air pollution, and the gas market, which is continuously progressing
in economic terms, both need an international institution to play a more
serious role in order to safeguard the interests of those countries that
possess rich natural gas reserves. And this must be done at a time that various
forms of energy, including gas, are considered major sources of power for
countries that possess them due to the bright future for their consumption.
This issue has been already proven in the political faceoff between Russia and
the West, in which it became clear to what extent Russia can bank on its gas
reserves as a reliable weapon in the face of pressures that are exerted on the
country by the West.
The increasing need of such countries,
including the European ones, to gas reserve that abound in Southwest Asia and
Central Asia, shows that the inhabitants of the Green Continent must take one
point into consideration in their political relations with countries in these
regions, including Iran, which is now one of the world’s two main gas powers.
They must know that if they want to mount political pressures on Iran and take
advantage of such economic tools as sanctions to achieve their political goals,
Iran will be also able to use gas against them as a tool, which will become
more of a political power tool in future than it is now. The direct threat
posed by the Leader of the Islamic Revolution about imposing gas sanctions on
Europe, in view of the future prospect of Iran's gas production, which is
expected to hit 1,000 million cubic meters in the next two years, on the one
hand, and increasing willingness of the inhabitants of the Green Continent to
import gas from Iran, which has been evident in consultations that took place
in recent months during visits by European trade delegations to Iran, on the
other hand, prove that the issue of natural gas goes far beyond pure economy
and economic benefits. In the near future, the natural gas will turn into a
political and strategic power tool for countries that possess its reserves and
Iran must not stay away from developments that will take place in the global
gas market.
Key Words: Summit, Gas Exporting Countries Forum
(GECF), Tehran, Natural Gas, Economic Benefits, Political Power Tool, Iran,
Russia, Organization of the Petroleum Exporting Countries (OPEC), Arab
Countries, Challenges, Global Gas Market, Pricing Development, Europe,
Southwest Asia, Central Asia, Hassanzadeh
Source:
Khorasan Newspaper
Translated By: Iran
Review.Org
