Unconventional Oil & Gas Map of the World, September 2011
Source: World Energy Atlas

No commercial shale gas is produced outside of North America, but interest is gaining ground in many basins – some largely untapped – while international operators are eying new prospects in Africa, Asia, Australia, Europe, and South America.

Russian gas giant Gazprom may face hard times. Russia’s Ministry of Economic Development is fearful that Gazprom may lose its leading positions on the domestic and foreign markets.
According to the Finmarket information agency, Russia’s ministry is urging Gazprom to weigh seriously the expediency of some investment projects without any further delay. Most of all Russia’s Ministry of Economic Development fears that the cheap U.S. shale gas will make its way into the European market as a result of which Gazprom would have to reconsider its pricing policy.

On the results of the recent conference taking part in which were representatives of several Russian ministries, the Ministry of Economic Development compiled a letter, enumerating a number of factors that can potentially do damage to Gazprom. As regards the domestic market, the growth of the market share of independent producers, including the NOVATEK Company, the biggest of them all, comes first. On last year’s results, the share of private gas suppliers on the Russian market that has already reached 25 per cent continues to grow. The situation on the foreign market is an object of serious concern for the Russian government since 75 per cent of Gazprom’s revenues are formed by gas supplies meant for export. Europe, where serious pressure is currently being put on gas suppliers because of excess supply, is the main market of the Russian holding abroad. The situation may worsen in 2 years. Gas export terminals in the USA are expected to start working at full capacity in 2016. Russia’s Ministry of Economic Development believes that the arrival of the U.S. gas to the European market may painfully hit Gazprom since it will have to correct its pricing policy.

The ministry officials believe that raising the efficiency of investments could prove helpful in the counteraction to negative factors on both the domestic and foreign markets. The ministry is urging Gazprom to make sure once again that each of its investment programmes is really expedient. Gazprom is not commenting on the letter of the Ministry of Economic Development but judging by the statements Gazprom representatives have been making in recent times, it is rather doubtful that the company shares the ministry’s concerns over the cheap U.S. shale gas. Some time ago Gazprom Head Alexei Miller said that the presence of shale gas in Europe is currently insignificant. Independent analyst Dmitry Adamidov says that the position of the state holding is well substantiated since the prospects for boosting shale gas extraction are still causing doubts.

"There were many ’shale revolutions’, and all of them ended in nothing. A ’shale revolution’ is more of a media event than anything else. They are aimed at attracting investors’ money to such projects. The initiators of such projects usually profit from capital investments. That is why Gazprom is not worried at all."

Really, many analysts are sure that shale gas extraction costs more than mining companies say. And this is despite the fact that the annual investments of oil-and-gas companies in the assets dealing with shale gas come to dozens of billions dollars, and there’s always a risk that they will not be repaid.

Source: Voice of Russia