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Gas cartel linked to oil in short term

MOSCOW, Dec. 26 (UPI) -- A committee for a gas cartel indoctrinated in Moscow says it is unlikely pricing mechanisms for natural gas will decouple from crude oil prices.

Officials formalized the Gas Exporting Countries Forum in Moscow Tuesday, coordinating the efforts of 12 major gas-producing nations. Ministers there said the structure of the gas cartel would be different from the oil sector because of long-term contracts, rather than market mechanisms for crude oil.

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An analysis commissioned by gas producers at a GECF summit in Doha in 2007 said non-crude indicators may factor into gas price mechanisms in the future, but short-term projections would be difficult to assess without links to crude oil, the Platts news service reported.

"Due to inter-fuel competition, it is impossible to eliminate the link to the oil price (in gas markets), where gas consumers are able to switch to oil products," the committee report said.

The study found baseline wholesale prices for natural gas would be conditioned on transportation and production costs, warning future projects could face delays or cancellations as costs climb in the faltering world financial market.

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