Situation on world gas market worse than oil, since there's no regulator like OPEC - Novak
MOSCOW. June 22 (Interfax) - The situation on the world oil market is more chaotic and difficult than on the oil market, since it does not have a regulator like OPEC, Russian Energy Minister Alexander Novak said in an interview with German paper Handelsblatt.
The gas industry has the Gas Exporting Countries Forum (GECF), which has still not become a spokesman for the industry's interests, let alone its coordinator.
"The gas market, like the oil sector, has become very volatile. When prices fall sharply, investment also decreases, and when supply decreases, prices stabilize. I hope that on the gas market the worst is also behind us. Although here the situation if far more difficult, since in the gas sector there are no regulatory bodies like OPEC, and it's more difficult to coordinate the actions of various parties. Therefore, the gas market is more chaotic and some companies will go bankrupt," Novak said in the interview, the Russian text of which was posted on the Energy Ministry's website.
He said that in the gas sector "investment will decrease and production capacity will be shut down in countries where there are projects that will be impossible to implement at current prices," including some projects in the United States. "I, of course, closely watch the development of the situation in the U.S., and there are, of course, companies there that will not survive the current price level," Novak said.
He agreed with the International Energy Agency's forecast that global demand for gas will slump by 4% in 2020.
"The situation on the gas market [like on the oil market] is also very difficult due to the drop in demand related to the coronavirus pandemic. Our experts are proceeding from the assumption that gas consumption will decrease by 4%. Due to recent warm winters, forecasts regarding the growth of gas consumption were already obsolete. Meanwhile, a great deal of capacity is being built for liquefaction of natural gas, and the share of LNG on the market is growing. But due to the drop in demand related to the pandemic, there is a big surplus of LNG supply and, yes, prices on the spot gas market are also under pressure - prices have fallen by double digits," Novak said.
