Speaking to Shana ahead of the upcoming summit meeting of the Gas Exporting Countries Forum (GECF), Mehdi Assali said leaders of 6 GECF member countries along with the present of a friend country will attend the November 23rd summit meeting in Tehran.
The following is an excerpt of the interview:
Shana: Energy security and environment are two major challenges in the world. How do GECF member states ready tackle these challenges:
Assali: Gas, given its clean nature and accessibility, can be a proper response to both of these concerns. A glance at the global energy mix indicates that nearly 80% of the global energy demand is supplied by fossil fuels including oil, gas and coal with the role of gas rising. The point is that energy security and climate change are global issues that must be tackled by a global effort as well. In other words, not a single country can confront these challenges independent of other countries and a collective effort is needed in this regard. Members of GECF, given the fact that they control 67% of global gas reserves, can be a major help to the world both in ensuring energy security and preserving the environment, and this is one of the significant features of the Tehran summit meeting.
Shana: It is estimated by leading energy agencies in the world that by the next 50 years, fossil fuels will still remain on top of the world's energy consumption basket. What will be the position of natural gas in this regard?
Assali: One can surely forecast a rising role for natural gas in global energy mix in the future because the fuel can address energy security and climate change concerns much better than its fossil rivals. For the time being, a billion people in the world lack direct access to modern energy resources and many of these people are living in remote regions where they cut the trees and damage the environment for soothing their need for energy; therefore, efforts must be made to meet energy needs of such societies by natural gas. On the other hand trading coal is a demanding practice, when compared to natural gas, and oil products are more expensive than gas and are more destructive to the ecosystem.
Shana: So do you believe that expansion of natural gas consumption is a must in today's world?
Yes. As far as experts have said, by the next 50 years, fossil fuels will top energy choices for meeting global needs and natural gas, because of its natural cleanness compared with other fossil fuels, will be focused. Besides, gas has proved more efficient for power generation in power plants when compared with oil and coal while producing less pollution.
Shana: Indonesia and Brunei has requested to join GECF. Do you think this will bolster the forum's clout in global gas markets?
If these two countries join the forum, its members will control over 75% of global gas reserves and this is an indication of GECF's clout in global gas markets. As a matter of fact, the grasp of GECF in the world will grow and become somewhat comparable with OPEC's role in oil markets. Share of oil in global energy mix will be diminish in the future while gas's share in the mix is expected to rise.
Shana: How are GECF members interacting with their customers?
Assali: Now that we are talking, 45% of the world's gas exports are being carried out by GECF members. Moreover, GECF members are very influential in gas pipelines and LNG exports. The forum's secretary general has attended numerous assemblies at international energy bodies like IEF, which has been formed to ensure supply-demand balance in the market, to negotiate with producers and consumers of natural gas.
Shana: Therefore, the forum only provides energy security to the market and does not guarantee it; the dispute between Russia and Ukraine in recent years has undermined energy security of Europe. Are GECF members considering joint meeting with gas consumers?
Assali: When it comes to gas trade, two issues must be considered: energy access and energy price. Facilitating access to gas as an energy resource is one of the policies sought by GECF members. But when it comes to pricing of the commodity, different exporting companies and importers may have varying views on pricing the item. Natural gas market is not an integrated market where prices are universally determined; therefore, there is always room for price agreements between sellers and buyers. We, as GECF members, would do whatever we can to ensure energy security in the world by investing in projects to boost our gas output. Problems what may arise between gas companies must be settled by them and their related countries. For governments, energy security in the world is much more important than pricing.
Shana: What is the top GECF strategy?
Assali: Our top strategy is promote energy security and control climate change by replacing coal with natural gas at least in power generation. Provided that natural gas can replace coal in power generation by the next 40 years, a major boost in the role of GECF members can be expected in global gas market. This is a palatable strategy as it has been fully signed off by GECF members. They can earn more by saving the planet.
Shana: There are rumors that GECF will become a cartel just like OPEC. Is the forum really moving in that path?
Assali: Before answering this question I must make it clear that OPEC is no cartel. A cartel is a gathering of companies operating in a specific field which are financially and legally independent and unite to control their markets and pricing of their items. Cartels are formed to control markets by weakening or eliminating rivals and creating monopolies; however as you may know, this is not the case in the oil market and OPEC. Today, OPEC supplies only 40$ of the world's liquid fuel output. Beside, OPEC is run by the governments of crude exporters which adjust their policies to ensure market stability. A cartel, however, consists of companies which usually meet secretly to act hand in glove to manipulate their market. OPEC is not a cartel as far as it is being run by governments; governments that has energy policies.
About GECF being a cartel. The forum is not even an organization; it is just a forum formed for exchanging views and making policies. The forum's decisions are not binding. Albeit, countries cooperating with the forum can lead to supply of cheaper gas for consumers at the end of the day.
Shana: GECF is the forum of gas exporting countries while some of its members are not regarded as gas exporters. How is that?
Assali: Some of the forum's members, like Russia, Algeria and Qatar are leading gas exporters and other members like Iran and Egypt are very potential gas exporters. Some of the member states concert their gas into power and export it and because of this consider themselves as gas exporters.
Shana: How can the forum help Iran reach its energy goals?
Assali: Although Iran owns the world's biggest gas reserves, it has not been able to use its reserves because of the sanctions; immediately after the lifting of sanctions, and arrival of foreign investors to Iran, the country will regain its positions in the gas market in the world.
As an economic expert, I should say the forum can become a reliable basis for boosting Iran's gas industry in the region. Expansion of the forum can be strategically beneficial for Iran in the long run.
Shana: The 3rd GECF summit meeting is the most significant event in Iran following the nuclear deal Iran struck with world powers in Vienna. How is Iran preparing for the summit meeting?
Assali: Holding such a meeting at such level shows the world that Iran, despite the sanctions, can play an active role in global economy and help form strategies for gas exporting countries.
Shana: Do you think the forum's Secretary General Mohammad Hossein Adeli will be reelected for his post in the forum?
Assali: The norm is that if he wishes to remain in his post he can extend it for another term provided that other members of the forum agree. This is what happened during Leonid Bukhanovsky's time.
By SHANA
