The Likelihood and Potential Implications of a Natural Gas Cartel

In Roger Fouquet (ed), Handbook on Energy and Climate Change. Cheltenham (UK), Edward Elgar, 2013, pp. 86-102.

The chapter discusses the prospects for a natural gas cartel, taking the Gas Exporting Countries Forum (GECF) as point of departure. We consider the GECF countries’ position in the current gas market, comparing them with the OPEC countries. Gas markets have certain characteristics that differ from the oil market, and these are important to assess as well. A prerequisite for turning any constellation of gas-exporting countries into a gas cartel is that it is sufficiently profitable to coordinate action. We discuss this in light of simulation results, using a large scale model for international gas markets. Moreover, the potential market implications of a gas cartel are considered. The biggest gas exporter in the world is Russia, which also holds the largest share of global gas reserves. Russia is one of the key GECF members, and its position vis- à- vis cartelization will to a large degree determine whether or not, and in what form, a gas cartel will appear.