Russia blew off gas

This country is no longer the world's leading gas producer

Russia is no longer the leading country in the production of natural gas. Last year, we handed the palm of victory to the United States, which was able to organize the extraction of the "blue fuel" from shale deposits. Experts have already announced that "a quiet gas revolution" had taken place; and now, it could spread to Europe and China.

The United States surpassed Russia's gas production levels due to the sharp increase in shale gas recovery - from 2% to 10% of the total volume of recovery in some three years. The technological breakthrough enabled companies to extract gas from the reserves, which were earlier considered inaccessible. While in the previous years the United States expected to import their natural gas, today, according to the CEO of BP, Tony Hayward, "experts believe that the U.S. has enough gas reserves for decades to come".

China is already trying to do the same. Its largest energy company, PetroChina, estimates its shale gas reserves to be 45 trillion cubic meters. According to a report produced by Statistical Review of World Energy, that is more than last year's Russian proven gas reserves. By 2030, China expects to increase its share of shale gas to 25% of total gas production. Europe is also trying to find shale gas. Exxon Mobil, Royal Dutch Shell and BP are closely involved in this process. Today, according to The Financial Times, Russia may "lose its role as Europe's leading supplier of gas".

Shale gas is not being recovered in Russia, and many experts are quite skeptical about its outlook on the global scale. "So far, all forecasts are being made on one country's success with shale gas. But, will this revolution be exported to other countries? Perhaps, shale gas will remain a purely regional miracle," says Konstantin Simonov, director of the National Energy Security Fund. According to him, there are at least three factors that support this idea.

First - is the technological factor. The specificity of oil shale deposits is such that the ultimate technology depends on the specific field. Moreover, it is necessary to continuously drill wells. And, the money must be invested today, while returns will come in 10-15 years. The United States spent 20 years on its technological breakthrough.

Second - the environment. In the United States, shale gas is being extracted in desert areas. Meanwhile, according to the expert, officials turn a blind eye to the environmental issues. This won't work in Europe: there are no deserts, and environmental protection is taken very seriously.

Third - the price of gas. U.S. estimates show that the exploration of shale gas reserves in the United States will be profitable with a market gas price of $210-250 per 1,000 cubic meters. And, that is not cheap. In Europe, the current average price of natural gas amounts to about $300 per1,000 cubic meters. Meanwhile, Qatari liquefied gas may be purchased for$170-180 per 1,000 cubic meters.

So, perhaps it is too early to put traditional gas to rest. This is seconded by the prime minister of Poland, where four of America's largest oil companies acquired exploitation rights of shale gas on a territory of more than 1 million acres. However, despite the prospect of large fuel reserves, Poland decided to insure itself. In December of last year, it renewed its natural gas supplies agreement with Russia for another 37 years.

By Varvara Aglamishyan

Source: Izvestia, 15.03.2010