Alexei Miller, CEO of Gazprom, believes ‘that OPEC doesn’t have any real influence on the global oil market nowadays’. Interviewed by the Financial Times, he claimed that ‘not a single decision has been passed of late that would really influence the global oil market’. And he repeated his suggestion that oil could reach $250/bbl, noting that ‘the last 10 years saw Chinese energy consumption almost double and India’s grow over 1.5-fold’.
He was also very open about Gazprom’s ambitions within the Gas Exporting Countries Forum. He said they ‘plan to turn it into a permanently active influential international organization. The challenges we encounter call for coordinated approach. In contrast to OPEC, the principal goal of the forum is not the distribution of current production quotas’. Miller added that in Gazprom’s view, ‘the gas market is very different from the oil market and most contracts are and will remain long-term. We cannot fail in supplying gas to our contracted consumers. It is simply impossible.’
However, he does anticipate gas prices moving closer to oil in the future. In an important policy statement, he set out the view that ‘at present the BTU-adjusted gas price doesn’t exceed 70% of the current oil price. This is due to greater flexibility and consumer attributes of oil. But the development of liquefied natural gas brings the market qualities of oil and gas ever closer, specifically as gas is capable of becoming a universal motor fuel. All this strengthens the long-term gas/oil link.’
Chemical companies hoping that LNG might provide a lower-priced alternative to oil have been warned. Whilst, as I noted last year, it is worth remembering that Gazprom also has a clear ambition to grow its own presence in the petchem sector.