The way most oil & gas is being sold by GECF and Aramco, their selling through the USA dollar, calls for a replacement. Chindia and euroland are showing the new way.

The Gas Exporting Countries Forum (GECF) was formally established in 2008.

Its members are Algeria, Bolivia, Brunei, Indonesia, Egypt, Iran, Libya, Malaysia, Nigeria, Qatar, Russia, UAE, Venezuela and Trinidad and Tobago.

Experts from the group’s members held a meeting in Doha, Qatar, on 09 and 10 November 2009, paving the way for the GECF ‘s ministerial gathering in Doha on 09 December 2009, where the organisation’s secretary general will be appointed, its permanent secretariat headquarters will be inaugurated, and gas prices in international markets will be discussed. (1)

Some industry analysts have described it as the “gas OPEC.” But the way most gas is sold — through long-term contracts — limits the extent to which it can mimic OPEC’s practice of coordinating production levels among its members. (2)

The Times reported last week that Saudi Aramco was also experiencing “dollar problems” due to the way most of Aramco’s oil is sold to the USA. The Saudis don’t trade oil but historically sell it at fixed discounts to West Texas Intermediate (WTI), set in advance. With WTI bouncing around, the Saudis cannot price their oil competitively against rival sour crudes. Customers are annoyed; by the time that cargoes arrive from Arabia, WTI’s oscillations could make Saudi crude dirt cheap or horribly dear. (3)

The euro is the first currency that has not only SEVERED ITS LINK to gold, but also its link to the nation-state, said the late European Central Bank president Wim Duisenberg on 9 May 2002. (4)

Lorenzo Bini Smaghi, a board member of the same ECB, said on, 06 October 2009, that China for one needs to bite bullet. “I think the best way is that China starts adopting its own monetary policy and DETACH itself from the Fed’s policy.”  (5)

India is buying gold (6) and is selling USA T-bills to that effect. (7)

Chindia is following the euro’s example.

The USA dollar is toast.

Hence, the Gas Exporting Countries Forum and Saudi Aramco need a replacement.

Chindia and euroland are showing the way.

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/

NOTES

(1)
Leading gas producers to meet in Doha
Wed, 04 Nov 2009 07:36:17 GMT
http://www.presstv.ir/detail.aspx?id=110409§ionid=3510213

(2)
Gas exporters’ forum should mimic OPEC: Algeria
Tue Nov 10, 2009 2:47pm GMT
http://af.reuters.com/article/investingNews/idAFJOE5A90IV20091110

(3)
From The Times November 4, 2009
Saudi Aramco seeks solution to crude problem
Carl Mortished: World business briefing
http://business.timesonline.co.uk/tol/business/columnists/article6901552.ece
discussed by yours truly here:
Incoterms or dollar? Re: Saudi Aramco US sales
Posted by Ivo Cerckel on November 4th, 2009
http://bphouse.com/honest_money/2009/11/04/incoterms-or-dollar-re-saudi-aramco-us-sales/

(4)
International Charlemagne Prize of Aachen for 2002
Acceptance speech by Dr. Willem F. Duisenberg, President of the European Central Bank, Aachen, 9 May 2002
http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html

(5)
China calls time on dollar hegemony
You can date the end of dollar hegemony from China’s decision last month to sell its first batch of sovereign bonds in Chinese yuan to foreigners.
By Ambrose Evans-Pritchard
Published: 7:33PM BST 06 Oct 2009
http://www.telegraph.co.uk/finance/china-business/6266790/China-calls-time-on-dollar-hegemony

(6)
India Buys IMF Gold to Boost Reserves as Dollar Drops (Update2)
By Thomas Kutty Abraham and Kim Kyoungwha
Nov. 3 (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601091&sid=aa6oc6Wz9Ftg

(7)
RBI may’ve sold US T-bills to buy gold – The Economic Times
7 Nov 2009, 0217 hrs IST, ET Bureau
http://economictimes.indiatimes.com/news/economy/finance/RBI-mayve-sold-US-T-bills-to-buy-gold/articleshow/5205038.cms