Qatar’s al-Attiyah says gas is undervalued, sees demand rising

DOHA (Bloomberg) -- Natural gas prices, down 18 percent in the U.S. this year, are too low and demand will rebound, Qatar’s Energy Minister said.

“By 2013, 2012, the world will see more demand” than supply, Abdullah bin Hamad al-Attiyah said at a conference in Doha on Saturday, calling the current drop in demand “short-term.”

Gas prices on the U.S. and U.K. spot markets have fallen as a worldwide economic slowdown curtailed energy demand. The International Energy Agency said a looming gas glut will damp prices, the Financial Times reported Nov. 5, citing a draft version of the agency’s world energy outlook due to be released later this month.

Oil, which gained 74 percent in New York this year, is almost three times more expensive than natural gas when measured by energy produced in British thermal units. Qatar, which holds the world’s third-largest gas reserves, aims to increase annual liquefied natural gas production capacity to 77 million tons by next year from 54 million now.

LNG is gas that’s been cooled to a liquid for transportation by ship to markets not connected by pipeline.

Al-Attiyah said its “too early” to predict what will be decided at next month’s meeting of the Organization of Petroleum Exporting Countries. Oil, which fell $2.19, or 2.8 percent, to $77.43 a barrel on Friday, has risen for reasons “not related completely to demand and supply” because of currency moves, he said.

“It’s related to a new correlation, the dollar,” al- Attiyah said. “The dollar goes up, oil goes down.”

The dollar traded at $1.48 to the euro on Friday compared with $1.253, its strongest level this year, on Feb. 18. A falling dollar may increase the appeal of commodities as a hedge against inflation.

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