By Satish Kanady
DOHA: OPEC countries and other oil-producing nations are closely watching developments in the global energy market. The market is volatile, but will settle, H E Dr Mohammed bin Saleh Al Sada, Minister of Energy and Industry said yesterday.
Talking to reporters, Dr Al Sada repeatedly expressed the hope that the market will settle ‘sooner or later’.
To a volley of repeated queries on oil prices, Dr Al Sada toed the same line. “We need to watch the market closely. It will settle. We should not over-project what would happen in future”.
On the oil price impact on gas market, Dr Al Sada said: “The markets are interconnected. We can see oil prices affecting gas prices too. There is a strong degree of variation on the spot prices in different regions”.
On the short-term impact on revenues of gas producing countries, he said the demand is rising in line with the surge in supply. “We believe gas has strong advantage as a source of clean energy. The understanding from climate change issues is set to influence the market positively in a big way. The gas demand will be augmented to avail it as a source of clean energy”.
Dr Al Sada said individual countries are free to decide what pricing models they should follow. There are countries which adopt long-term gas contract and linking oil and gas prices. There are many contracts linked to gas-to-gas and linked to supply-demand.
“Since oil is more liquid in stock markets, some economies are keen on linking gas price to oil… Mutual agreement between the companies depends on what sort of indices suit them”, he said.
On ‘how prepared is the region to tackle Shale revolution’, Dr Al Sada said: “We are in an open market. What dominate the market are fundamentals. Fundamentals will take time to settle.”
Of course, Shale is a major development. But it is too early to predict its impact on the conventional gas market, said Seyed Mohammad Hossein Adeli, Secretary General, GECF. Currently, the development of shale, other than in the US, is not at ‘economic level’. There is some production in China that is negligible.
“We expect the first major export of shale gas during 2016-2018. Our short-term outlook is going to have ‘some amount of export’. We have to wait for the price is to settle,” Seyed Mohammad said.
The Peninsula
