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Tue 8 May 2007 11:06 AM

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Gas cartel unlikely to succeed

Energy economist says gas is not suited for an OPEC-style producers' group.

The OPEC-style cartel proposed by some gas producers at last month's Gas Producing Countries Forum in Doha would stand little chance of success, according to an economist at a major US investment bank.

Ed Morse, chief energy economist, Lehman Brothers, said: "I think the likelihood of a gas producers' group having any impact globally is quite negligible. I understand the motivations that various parties have had for discussions of a gas producer arrangement, but the world is really very far away from a world in which you could make comparisons between oil and natural gas. Oil is global, natural gas remains regional."

He pointed out that gas prices differ greatly between different regions of the world, making it difficult to develop a common pricing mechanism.

Morse said: "Nobody that I'm aware of is actually talking about a commonality of approach when it comes to targeting a common set of price targets."

However, he was positive about the prospects of IMEX (the International Mercantile Exchange), the energy futures bourse due to be established in Qatar by the end of the year, which is likely to focus on liquefied natural gas (LNG).

"Whether an LNG contract works this year or next year, it will happen...and it is likely to be Middle East-based," Morse said.

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