By Simon Webb and Daniel Fineren
DUBAI/LONDON (Reuters) - The world's biggest gas powers will discuss an unprecedented slide in global demand and prices when they meet in Qatar on Tuesday but there is little they can do about it - yet.
The global economic downturn and its impact on gas consumption will be high on the agenda when ministers from a club of countries holding more than three-quarters of the world's gas reserves meet on Tuesday in Doha.
"At current prices I don't know if investment in gas will continue," said Mohammad Ali Khatibi, Iran's representative to the Gas Exporting Countries Forum (GECF).
"There is no return for investors. We will review the market and see what we can do to help stability."
Weak demand and sagging prices in some markets may give impetus to GECF moves to increase cooperation, said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies.
"Gas exporters have never seen demand drop by as much as it is dropping this year," he said. "Cartels are only effective when prices are low. When prices are high there is no need to form a cartel."
Previous meetings of the GECF have caused consternation among gas consumers, who fear the group may develop the same influence over gas markets as the Organisation of the Petroleum Exporting Countries (OPEC) has over oil.
The GECF may eventually gain sway over prices but gas and crude trade is so different and the forum so immature that there is little chance of members working together for now.
"We should not be dismissive of this organisation," said Stern. "But we should not expect it to be a price and volume setter any time soon."
OPEC was formed in 1960 and took around a decade to become a force in global oil markets. The GECF, a loose group of 11 of the world's gas powers, is at a similar stage of development as OPEC was at inception, analysts said.
GAS TIES
Most gas is delivered through pipelines on long-term contracts, physically tying suppliers to their customers, while oil trades globally and moves on tankers to the highest bidder.
A spot market for tankers of liquefied natural gas (LNG) is growing and would likely eventually form a stronger link between regions. But for now the gas market remains fragmented and prices vary by region, limiting the potential for any concerted action to change fundamentals globally.
"The very idea of a 'gas OPEC' would be understandable only if they were talking about LNG," said Maria Radina, oil and gas analyst at UBS in Moscow.
"But you can't do it with gas transported in pipelines. Anyone can put oil in a bucket and keep it there until prices rise. But with gas you simply cannot do that."
EUROPE, CHARTER
Europe is the market over which the GECF holds the most potential power. Forum members Russia, Algeria and Libya between them contribute about 36 percent of Europe's gas supply, according to consultants Wood Mackenzie.
But forum members are all competing for Europe's market, so working together there might be tough, especially with demand for gas ebbing because of the economic crisis, analysts said.
"Nobody wants to lose the market," said Mikhail Korchemkin from think tank East European Gas Analysis.
"Russia's Gazprom's exports to Europe dropped 39 percent in the first quarter, while Qatar exported 20 percent more than a year ago. I do not think Qatar wants to reverse that trend. Therefore, gas OPEC has no chance."
Sagging demand and oversupply of oil and gas will likely make for a buyers market for the next few years. While that may encourage cooperation, it could also increase competition among sellers.
"Cooperation is much more challenging in a market that tends to favour buyers," Noel Tomnay, head of global gas at consultants Wood Mackenzie, said. "I think the GECF is a genuine force for the future but its baby steps at the moment."
The GECF's eleven members in December signed a charter, yet to be made public, aimed at transforming the group into a formal organisation from an informal talking shop. In Qatar, the group is expected to choose a secretary general.
(Additional reporting by Dmitry Zhdannikov and Simon Shuster in Moscow; editing by Sue Thomas)
