HE the Minister of Energy and Industry Dr Mohamed bin Saleh al-Sada has said falling investments will hasten the equilibrium between demand and supply and support gas prices.
“Nevertheless, it will probably take a number of years to reach that equilibrium,” al-Sada said at a press conference on the sidelines of the 18th Ministerial Meeting of the Gas Exporting Countries Forum (GECF) at the Four Seasons on Thursday.
On the US shale production, al-Sada said, “As in the case of shale oil, the US shale gas is also considered a game changer. Although the shale gas has entered the market, currently most of this is being consumed domestically in the US. But gradually it is entering the international market and will link the energy price more and more.”
Heightened demand is seen with the increase in gas production, the minister said. Every year, more countries are importing this form of energy.
“In Qatar, we have seen our gas opening up new markets – Pakistan is the latest country in this respect,” al-Sada said.
Along with the traditional gas markets, al-Sada said new markets including Latin America, India and Southeast Asia have emerged. Even in Europe, countries like Poland have started importing LNG.
Asked what impact Donald Trump’s victory would have on the global energy market, al-Sada said, “Their new energy policy remains to be seen…it is premature to judge it.”
In reply to another question, al-Sada said the oil and gas prices would always be connected.
“Not only oil and gas, but also other forms of energy interact with each other… influence each other. Different contract mechanisms including spot, short term and long term exist. But the connection will be there….it will remain.”
He said different buyers and sellers have their own preferences in relation to contracts. “Some prefer short term, others long term. These days, many prefer spot contracts. And they are all influenced by the basket of different forms of energy, especially oil.”
Al-Sada added, “For particular contracts, regardless of what kind of indexations you use – the linkages will always be there.”
GECF secretary general Dr Hossein Adeli said falling investments would impact gas supplies in a few years’ time.
“Gas exporters everywhere including the US are now facing challenges. Investments in the US gas sector were made when the prices were high. Now the prices are low. So, the chances of arbitrage are very low,” Adeli pointed out.
With Australia gearing up gas production, he said the US would have to compete with Australian gas.
“At GECF, we promote gas in general. More gas means better environment. That will promote a cleaner source of energy,” Adeli added.