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IEA slams gas OPEC proposal

by Reuters on Wednesday, 21 March 2007

Creating a cartel of gas exporting countries would hurt producers and consumers alike, the head of the International Energy Agency said on Tuesday.

Speculation about a gas cartel, potentially including Russia, Iran, Qatar and Algeria, has grown since Iranian Supreme Leader Ayatollah Ali Khamanei aired the idea in January.

He said Iran and Russia had half the world's gas reserves and could establish a group like the Organization of the Petroleum Exporting Countries (OPEC).

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IEA Executive Director Claude Mandil said he had doubts about how a gas OPEC would work in practice, given that supplies are mainly locked into long-term contracts with undertakings to provide specific quantities of gas.

"Does it mean... there would not be sanctity of contracts? That would be very serious and I hope nobody has that in mind," he told Reuters on the sidelines of an energy conference.

Mandil said that gas, unlike oil, competes with other energy sources such as coal, nuclear and renewables in power generation and heating, giving consumers alternatives.

"If there is too much noise about a gas cartel, I suspect consuming countries would make a lot of efforts to become less reliant on gas," he said.

The Paris-based IEA advises 26 industrialised nations on their energy policy.

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