Madrid: Natural gas, trading at a 39 per cent discount to crude, may rise to reach the record price of oil as demand for cleaner-burning fuels rises, according to energy ministers from Qatar and Algeria.
UK natural gas sells for 72.15 pence a therm, or the equivalent of $86 a barrel based on its energy content, compared with $141 for Brent crude. British natural gas rose 38 per cent this year, lagging behind the 51 per cent advance in oil.
Natural gas use worldwide rose 3.1 per cent last year, almost three times faster than the 1.1 per cent increase in oil, according to figures compiled by BP Plc. Gas is cleaner-burning than oil and creates half as much carbon dioxide as coal when used to generate power, helping ease the buildup of greenhouse gases blamed for climate change.
Alternative
"Gas is clean and it is an alternative to oil," Qatar oil minister Abdullah Al Attiyah said in an interview in Madrid this week. "The price should be at least competitive to oil." Qatar holds 895 trillion cubic feet of gas reserves, the world's third-largest.
Rising global energy demand, environmental restrictions and slower progress in expanding nuclear power and wind farms are increasing demand for gas.
Liquefied natural gas may become more expensive than crude oil as demand from Asia and Europe rises faster than supply, Sanford C. Bernstein & Co said in a report last month.
"Gas prices will follow oil prices; they will converge," said Algerian energy minister Chakib Khelil. The country is scaling back oil production growth to concentrate on gas.
"Our efforts are really focussed on gas," he said. Exports will rise 37 per cent by 2012 to 8.5 billion cubic feet a day, said Khelil, who is also the president of the Organisation of Petroleum Exporting Countries (Opec).
