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15

Gazprom bets on LNG and shale gas for the future

Russian monopoly Gazprom expects liquefied natural gas shipments to compete with rising output of shale gas in the US as the Russian producer aims to expand into the world’s biggest energy market.

 

Russian monopoly Gazprom expects liquefied natural gas shipments to compete with rising output of shale gas in the US as the Russian producer aims to expand into the world’s biggest energy market. “Shale gas and LNG are competitive in one price range,” Gazprom exec Alexander Medvedev said in an interview in Paris yesterday. “The market will say who will be in the market and with what.” Gazprom, the world’s biggest gas producer, plans to gain as much as 10% of the US market by 2020. The company’s trading unit in Houston already sells some LNG into the US through swap operations.

 

Gazprom has no reason yet to revise its target for US market share given the costs and possibly negative environmental impact of developing shale gas, Medvedev said. Gazprom’s output will depend on market conditions, he said. The Russian gas export monopoly and its partners in the Arctic Shtokman field last month delayed production and may scrap a proposed LNG plant in the initial stage of the project after demand fell. The partners, which include Norwegian state-run Statoil and French giant Total, had planned to ship as much as 90% of Shtokman LNG to North America. The world may have an “acute glut” of gas in the next few years because unconventional output is set to rise 71% between 2007 and 2030, the International Energy Agency said in November.

 

US shale gas could displace significant volumes of LNG, potentially growing to a similar scale as the entire current global LNG market by 2015, JPMorgan Chase & Company said in a report on 9 February. Gazprom is waiting for “full clarity” on US developments, and is not considering acquiring US shale gas assets, Medvedev said. The company started extracting coal-bed methane, another unconventional source of gas, last month. Gazprom also plans to move ahead with another Arctic gas development, the Yamal Peninsula, whose 16 trillion cubic meters reserves are more than four times larger than Shtokman’s. The company needs “a year or year and a half” to decide on foreign partners to help tap the resources of the peninsula, Medvedev said. “We like it that there is such a big interest,” Medvedev said without naming any companies.

 

Both pipeline and LNG options are under consideration for Yamal fields, he said. Russian Prime Minister Vladimir Putin discussed possible partnerships with Shell and Total among other international energy producers in September. French utility GDF Suez has been invited by the Russian government to take part in the Yamal project, GDF boss Gerard Mestrallet said yesterday in an interview in Paris. “We may be interested in participating, but it’s simply under consideration,” he said.

Source : Upstream