31 March 2013, 16:32

Shale gas industry is 'a bubble' – Gazprom CEO

Алексей Миллер
Alexey Miller
Alexey Miller

Alexey Miller, CEO of Gazprom, believes that the extraction of shale gas in the US is unprofitable and that the American shale gas industry “is not a competitor” for the Russian energy company.

In an interview for the state owned Rossiya 24 TV channel, Miller stressed that “currently, there aren’t any projects that we know of where shale gas production would be profitable”. He also pointed out that the US remains a country with a gas deficit and that the increase in volume of shale gas production corresponds with the dip conventional in natural gas extraction on US territory.

Gazprom CEO believes that the development of shale gas production in the US poses “no risks” for the Russian company and that the reason behind the increase in shale gas production is the desire for “energy security”. If Alexey Miller is correct in his view on the shale gas industry, then it can be inferred that for the US government the economic and financial considerations are secondary to the goal of having a reliable energy source on the US territory. Shale gas extraction can help the US get rid of the dependence on the energy delivered from the Middle East, but can’t help the American companies compete with Gazprom on the European market.

A number of experts believe that the shale market “revolution” is actually a bubble created on Wall Street in order to fool unsuspecting investors. Alexey Miller shares this view. “We are skeptical about shale gas… this soap bubble will burst soon”, he explained. The opinion expressed by Gazprom CEO is echoed by Vagit Alekperov, President of Lukoil. “Of course, it is a great achievement on the part of US engineers that America is now producing oil and gas from shale. In order to do it, they had to drill very tricky wells and do hydraulic fracturing. Undoubtedly, this is an achievement, but I wouldn’t call it a revolution” he told RT. This view is supported by a number of Western experts. In a recent report published by Bloomberg New Energy Finance, the possibility of a “shale gas revolution” in the UK was described as “wishful thinking”. Despite the successes of the shale gas industry in the US, the future of the European energy market is still dependent on conventional gas producers like Gazprom.

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