HE Dr. Seyed Mohammed Hossein Adeli, Secretary General, Gas Exporting Countries Forum (GECF), Qatar
The secretary general of the GECF discusses the global rise of gas, the need to create a new international institution to promote the interests of gas exporting countries, and the role of Qatar in today’s global gas mix.
You have been Iranian Ambassador to the UK, to Canada and to Japan. You have also managed financial institutions like the Central Bank of Iran. What is your previous experience related to the oil and gas industry?
Among others, I have held positions such as Advisor to the Minister of Oil on International Affairs and Deputy Foreign Minister for Economic and Energy Affairs. I was instrumental in economic reforms and also chief negotiator in gas projects such as the Iran-Pakistan-India gas pipeline, Iran-Europe gas cooperation and the Iran-Armenia gas pipeline as well as in common offshore gas fields with Kuwait and Saudi Arabia. Last but not least, I was also Chairman of the Board of Directors of the National Iranian Gas Export Company.
On January 1st 2014, you were appointed Secretary General of GECF. What were your key objectives for GECF upon assuming this role for the next two years, and how do you intend to achieve them?
The main objective of the GECF is to support the sovereign rights of member countries over their natural gas resources and their abilities to independently plan and manage the sustainable, efficient and environmentally conscious development, use and conservation of natural gas resources for the benefit of their peoples.
Based on its mission, the GECF is promoting exchange of data for a stable and transparent energy market, although a global energy data reporting architecture cannot be built in a day. One of our primary objectives is to reduce gas market volatility through enhanced energy market transparency. This is developed by establishing close cooperation with international energy organizations to work jointly on gas data reporting mechanisms and developing the GECF data with their valuable contributions.
Indeed, the correct data reporting mechanism is of high importance if not the most important for the forum in this phase of institutional building of the secretariat of the GECF. Furthermore, it will be of great significance to progress with the data exchange between the GECF member countries.
On top of that, we have recently introduced initiatives like the GECF monthly lecture series, which attracts audiences that include ambassadors and members of the diplomatic corps, businesses and oil and gas companies, academics and interested players in the energy sector. The monthly lecture, which is now in its fifth edition, is by invitation only and has since become a monthly gas gathering.
What do you see as the role of GECF in helping to meet the growing worldwide energy demand in terms of gas production in the coming years?
The GECF is an international governmental organization that as of now comprises of 17 member and observer countries. They are built on a strong foundation of being blessed with huge gas reserves. When we examine these reserves, we can see that collectively they account for more than 67 percent of the world’s proven natural gas reserves, around 40 percent of gas pipeline exports and above 65 percent of the world’s LNG exports. These figures undoubtedly provide this organization with a very strategic position.
Our vision is to become an authentic platform and a credible point of reference for natural gas, and also serve as an effective and efficient center for the exchange of views and policy debate on different aspects and development of natural gas.
The GECF strives to promote natural gas as a green fuel, an abundant resource and a safe alternative capable of providing the answer to the 21st century challenge for sustainable development. There are also environmental concerns around the world, some of which were highlighted in COP 19 in Warsaw, which focuses attention on the use of gas as the cleanest fossil fuel.
Natural gas has several advantages in being a friendly fuel. It has lower GHG emissions as opposed to coal and oil. In terms of power generation, gas fired plants produce 45 percent less CO2 emissions than coal. Also, in recent years it continued to raise its profile in global energy markets.
In terms of perspectives, experts are expecting a considerable rise of the world energy consumption and they all agree to underline that natural gas will record a very important growth particularity during the next three decades.
Our forecast assumes that oil’s market share of global primary energy demand is set to continue its decline (from 31 percent to around 25 percent by 2035), while coal’s is to stall and to start to decline by 2035 (from 28 percent to 25 percent by 2035). The decline in these two markets is expected to be to the advantage of natural gas, nuclear, hydro, renewables and biomass but with natural gas benefiting the most and will see its market share mix increase from 21 percent to almost 26 percent by 2035.
According to the International Group of Liquefied Gas Importers, Asia accounted for more than 70 percent of the world’s estimated 236 million tons of LNG trade in 2012. From your perspective, what is the role of Qatar in this new market trend?
Qatar is currently one of the major players on the LNG market and, taking a cue from the rapidly changing global energy dynamics, is shifting its LNG export from Europe to Asia. The country is seeking to consolidate its leadership in the segment, and it has already become the largest producer. Qatar benefits from a favorable geographic location between Europe and Asia, and is also a maritime country. As a major producer, the country can balance its exports by supplying both the European and the Asian markets, depending on which one offers the best price. For example, during the last years LNG prices were high in Asia and low in crisis-hit Europe, which prompted Qatar to shift much of its exports to the Asian market.
In detail, according to some reports, the share of Qatar’s LNG exports to Asia has reached 73.5 percent in January 2013 witnessing a sharp jump of over 30 percent compared with 56.4 percent in 2012. This major shift is driven by two important factors, one of them being surprising increase in oil and gas production in a few courtiers such as the US, Canada and Iraq.
Secondly, after the Fukushima incident in Japan, there is a retreat from nuclear power in some countries such as Germany and Switzerland. And very recently, Japan, a major nuclear energy reliant country, announced that by 2030, it will be zero nuclear power in its energy mix.
By becoming a truly global provider of LNG, some say that Qatar has done more than any provider to move away from oil indexation towards gas-to-gas competition. Since the establishment of Qatar as the world’s largest exporter of LNG and worldwide LNG hub there have emerged several liquefaction giants, such as Australia, East Africa, and the United States, potentially creating more competitive gas pricing. What challenges lie ahead for Qatar in maintaining its position as the number one exporter of LNG in the world?
The challenge that Qatar could end up having sooner than expected will be the one related to its internal consumption, given that domestic consumption will increase. Actually, that won’t be limited for Qatar: the increase of domestic consumption is the same kind of challenge that many of the countries in the Middle East will face very soon.
Apart from that, we can’t not forget that global gas market is a fast evolving market. Which means that all countries and entities have to be prepared to any kind of change that might come in the near future, where a flexible way of working will be highlighted appreciated. In other words, there is an existing need to add flexibility to gas systems.
Many people have made the comparison between GECF and OPEC. Somebody even asked you at your Gerogetown University talk if you see GECF as a semi-political entity, like OPEC. What would say to this?
Let me first quote an Iranian energy expert branding oil and gas as follows: ‘oil is dating and gas is getting married.’ Therefore Oil and Gas are different so as OPEC and GECF. According to GECF statute, the Forum provides a framework for exchanging data, information and experience. There is no reference in our statute to suggest that GECF is founded to control the gas production of the member countries. The GECF was founded to create a discussion platform for gas producers and exporters to represent their interests on a global level, and to express a unified stance on gas developments and prospects, making the gas industry more predictable and sustainable in the long run. The forum platform is an interesting and practical means for GECF members to exchange information regarding investment opportunities in their own energy sectors.