The world 's biggest natural gas exporters met today (Monday) in Algeria and agreed to index gas prices to oil as shrinking U.S. natural gas imports are causing a global supply glut.
"All ministers agreed and supported that we continue our efforts to achieve indexing gas to oil," said Russian Energy Minister Sergei Shmatko.
The Gas Exporting Countries Forum (GECF) members include Russia, Iran, Qatar and eight other nations that hold two-thirds of the world 's gas reserves. They 've watched gas prices fall nearly 50% in the past two years. Current gas prices of $4 per million British thermal unit (BTU) are about 20 times lower than oil, but are usually around 10 times lower than oil.
U.S. natural gas prices have fallen 28% since December as an increase in the U.S. shale rock gas supply has reduced the need for U.S. natural gas imports. Shale rock gas is retrieved from tight rock formations and its U.S. boom led the country to extract more gas than Russia last year for the first time since 2001.
Russia 's energy giant Gazprom has a five-year plan to take 10% of the U.S. natural gas market share, but U.S. shale gas exploration has put a damper on that goal.
"The influence of shale gas raises the prospect of change on gas markets," Russian Natural Resources Minister Yuri Trutnev told Reuters. "We have a problem with shale gas. This is not only my position, but the position of Gazprom as well."
As the United States becomes a less reliable consumer, gas suppliers aren 't having much luck replacing the lost business.