The US is ready to deliver shale gas to Europe to replace gas delivered by Russian Gasprom company, US President Barack Obama said yesterday during the talks with the European partners in Brussels. Experts, however, say that Obama’s statement about the shale gas deliveries to Europe will take a long time, because his plan can hardly be implemented now.
Several Russian and international experts doubt that in the future the US will be able to oust Russia from the European gas market for several reasons – the US shale gas will cost more to Europe, than traditional gas from Russia.
In the past years, the US has managed to achieve a significant success in the technology of hydraulic fracture of deposits (fracking), which has led to the US leadership at the shale gas market. However, its export to the EU is impossible now, because of lack of the gas pipeline connecting the Atlantic Ocean and Europe and the only way to do that is to convert gas into LNG and transport it in tankers. This is a very labor-intensive and expensive process.
At present the US exports its gas to Canada and Mexico via pipeline. The US Energy Department has worked out the projects of six export LNG terminals, but the first of them will start to work only in 2015.
Jonathan Stern, Professor of the Oxford Institute of Energy Studies, said in an interiew to The Wall Street Journal that President Obama’s statements are unrealistic and can hardly be implemented. This is the plan for the future and after several years the US and Russia will be the main competitors at the world gas market. He believes all the statements now is nothing but political threats and discussions, which are not real.
Alexander Rar, Director of Research of the German-Russian Forum, said that despite all the statements US shale gas could be delivered to the world markets no earlier than 2016. He added that owing to the shale revolution and cheap gas, the US has managed to quickly restore its economic potential after the crisis and support its industry, which has become the locomotive of growth of the US economy during the post-crisis period. However, the possibilities for transportation of gas from the US to Europe remain limited and the US price could be very high for the EU. Gasprom’s absolute ousting from the Europen market is hardly possible, said Mikhail Krutihin, Managing Partner of RusEnergy company.
He added that the US needs to build the capacities for gas liquefication for its export.The US has 24 gas liquefying projects planned, but about three years is needed for them to start working. Total capacity of the first projects could exceed 30 billion cubic meters a year by 2020, while Gasprom exports about 130 billion cubic meters of gas a year to Europe.
During the past eight years Europe has imported less Russian gas. In 2006, 40% of the EU’s annual gas import came from Gasprom, but in 2013 the dependence on Russia gas declined to 25%.
EU member-states depend on 50% of imported gas and even with the current 25% of Russian deliveries this makes half of the entire European gas export and gas from other sources can hardly replace Russian gas at once. For instance, some Baltic countries import about 90% of consumed gas from Russia.
The US companies are not in a hurry to export its excess of shale gas, because it is insufficient and can cause price rises at the local market and if the companies feel that, this can lead to gas shortage. For instance, in 2009 the US stopped gas imports and satisfied 100% of local consumption.
Considering the experts at Fitch Rating Agency, if all 37 projects for construction of LNG plants in the US can produce 273 million tons of liquefied gas a year and this volume is exported, it will be enough to satisfy 68% of Europe’s needs. This will not be able to replace Russian gas, but could reduce Europe’s dependence on Russian gas by 16% by 2018.
At present Russia is the biggest supplier of gas to the EU. In 2013 Russian gas exports totaled 139.32 billion cub.m., up 23.9% against 2012. The volume of oil deliveries totaled between 150 and 170 million tons. Russia is in first place on the volume of traditional gas and it reached 47.5 trillion cub.m.. 30% of world fuel resources come from Russia. This should be enough for its local consumption for 80 years. It will not be easy to oust such a giant as Russia from the market.
