On January 1, 2022, Mohammed Hamel took office as the fourth Secretary General of the Gas Exporting Countries Forum. A native of Algeria, with a degree in mining engineering and economics, he has 39 years of experience in various fields of the energy sector. The GECF Secretary General has been the Senior Advisor to the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) for more than five years and the Head of the OPEC Department of Energy Studies for seven years.

The presence of the GECF Secretary General in the 26th Iran Oil, Gas, Refining and Petrochemical Exhibition in May provided an opportunity for the Oil and Energy Information Network (Shana) to talk to Mohammed Hamel about the latest developments in the gas market.

He said that it is still too soon to provide an assessment of the consequences of tensions between Russia and Ukraine, saying: "The global gas outlook, finalized in December 2021 and released in February 2022, clearly shows that energy demand as a whole is on the rise at about 29%, especially in the field of natural gas. The share of members of the Gas Exporting Countries Forum in global supply is projected to increase to 48 to 50 percent.”

The full text of Shana's conversation with Mohammed Hamel, Secretary General of the Gas Exporting Countries Forum, is as follows:

Mr. Hamel! It is a great pleasure to have the chance to interview you. As you are fully aware, the ongoing tensions between Ukraine and Russia have affected world energy markets. How do you see the short-term and long-term impacts of Kiev-Moscow tensions on the energy market?

Well, I thank you very much. I would like at the outset to reiterate how much I am pleased to be once again here in Tehran in this beautiful city, and under its sunny skies. So I’m really delighted to be here. I also had the opportunity yesterday (May 13) to visit the Oil and Gas, Refining and Petrochemical Exhibition. And I have had the opportunity to visit this exhibition a few years ago. And I was really impressed by the progress made by your esteemed country in the science and technology related to oil and gas. And this progress was made despite the economic restrictions that are imposed on your country. So, I would like at the outset to congratulate you for this remarkable progress. With regard to the recent developments and geopolitical tensions, I believe that it is still too early to assess all the implications of these events. Clearly, there are going to be lasting consequences in the short, medium and long-term. For natural gas, we may see a reconfiguration of the natural gas physical flows, likely more investments in natural gas upstream and downstream, expansion of LNG trade, an increase in supply costs, and maybe more importance given to investments in natural gas. We are, at the GECF, monitoring these developments and I hope Inshallah (God willing) that in our upcoming Global Gas Outlook, which is going to be published by the end of this year, we will be in a position to better assess what the future consequences are.

So you think that ongoing developments would be affecting GECF’s future decisions.

Well, you may be aware, the GECF is an intergovernmental organization comprising 19 member countries. I am optimistic that this organization will expand its membership in the future. The GECF member countries represent around 70% of global natural gas reserves. They contribute currently to around 55% of the supply of natural gas. So these are very important countries for the global energy systems in general, and natural gas systems in particular. The Global Gas Outlook, which we have published in 2022 [after it had been] finalized in December of last year, clearly shows that there is going to be a sharp increase in the demand for energy in general by around 29%, and natural gas in particular. And the contribution of the GECF member countries is expected to increase further to reach 48 to 50% of the global supply.

Is it in the mid-term or long-term?

In 2050. And so we remain very optimistic. We believe that natural gas demand will continue to increase and in fact natural gas will play a pivotal role in fuelling world economic growth, eradicating poverty, and also contributing to the protection of the environment, both at the local level in improving air quality in megacities, as well as at the global level in mitigating climate change.

So what do you think would be the biggest potential threat to the gas market in the future?

Well, I think for all energy systems, risks are stemming mainly from the economy, policies, technology and consumers’ choices. And all these drivers are, in fact, interdependent. But since you asked me about what the main threat is, I would say it is a risk, not a threat. And it is underinvestment. We have seen since 2014 that a combination of low natural gas prices as well as this, I would say, misleading narrative that natural gas is not consistent with climate change, as well as these Environment, Social, Governance (ESG) pressures on some financial actors and companies, exacerbated, of course, by the adverse impact of the coronavirus pandemic, has led to underinvestment. And we have seen in the fourth quarter of last year the impact of such underinvestment with the sharp increase in natural gas spot prices. So, I believe that it is important to invest. Of course, our industry is very capital-intensive. It is upfront loaded with long lead times, and therefore it requires policy stability, predictability and support. And I think we need also from the GECF side to strengthen [the] role that natural gas can work in conjunction with renewables. Natural gas is a partner of renewables. So in conjunction with renewables, it will play an important role, in particular, in the developing countries. I believe that at the moment, coal-to-gas switching in the developing world is the most realistic and cost-effective mitigation pathway.

So what are the most important steps GECF members intend to take to enhance their role in the gas market?

Well, I will not speak on behalf of the member countries, but on behalf of the Forum. So clearly, and this has been underlined and stressed in the Doha Declaration of the sixth GECF Summit of Heads of State and Government, that the GECF as an organization needs to strengthen its advocacy role, improve its global visibility, expand its membership, improve and strengthen the dialogue with both producers and consumers, as well as international and inter-governmental organizations. And we have started to work on these priorities. Recently, we have established an ad hoc working group on the long-term strategy with the participation of all member countries to review the strategy of the organization and see what plan of action we need to put in place in order to satisfy the requirements, resolutions and the guidance we have received from the leaders’ summit held in February.

Oil prices have peaked over recent months. Do you predict any energy transition, from oil and gas to other categories??

Well, in reality, it is spot gas prices that have increased. They have started increasing since July of last year and, as I said earlier, mainly due to underinvestment, the post-pandemic recovery, and other weather-related factors. But in fact, [the] prices of all commodities have increased, and not only natural gas. And it is maybe important to recall that since 2014, natural gas prices were very low and this was detrimental to exporting countries. But, I believe it is also detrimental for the gas companies and in the long-term, even for consuming countries. In addition, today, if spot prices are maybe relatively high compared to the past, long-term contract gas prices are much lower. In addition, if you look at the prices in the US, they are also not as high. So, this perception that natural gas prices are very high, in fact, is driven by the spot prices. But it’s not the reality for all gas prices. As far as the impacts [are concerned], we believe that this will help drive more investments. The tightness we are seeing in the market may continue in the short-term and the medium-term, because the new wave of LNG projects will come on stream mostly around 2026-2027. And, therefore, I would say all contributions to supply are welcome and I am optimistic about the state of the natural gas markets in the medium-term as well as in the long-term. Because it is a reality that natural gas, being a clean fuel, brings stability to power systems when they are depending on intermittent renewable sources of electricity. Natural gas is key to supplying and to satisfying world energy needs. So, I am very optimistic about the future of natural gas. Natural gas demand has increased by 26% since 2010. It was the highest growing hydrocarbon in the last decade. And I am convinced that its future is even brighter.

Iran’s Minister of Petroleum Javad Owji has said that sanctions imposed on the energy sector is in violation of international law and can affect all GECF member states regarding their role in market. What do you think?

In the Doha Declaration of the sixth GECF Summit, the GECF leaders expressed their concern in regards to the imposition of unilateral economic restrictions without the approval of the United Nations Security Council, because these have an adverse impact on natural gas supply. They have an adverse impact on the trade of natural gas, on market stability, and in reality, in the long term, it is detrimental to not only the producers, but also to consumers.