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According to Head of "Gazprom
Export" Alexander Medvedev, the Russian gas monopoly plans to take up to 10% of
the US gas market within the next five years. It means Gazprom considers the US
as its biggest partner of the near future.
EIA reports the total US gas consumption in 2008 at 657 bcm,
slightly up from the previous year despite the economic crisis.
Assuming that the market remains the same for another five years,
10% of it would make about 66 bcm. Note that in 2008, Germany (the
biggest current partner of Gazprom) has imported 38 bcm of Russian
gas.
The growth of the US gas
consumption was accompanied by the decrease of imports of both
pipeline gas and, especially, LNG. The share of LNG in the total gas
consumption has dropped from 3.3% in 2007 to 1.5% in 2008. This
trend is explained by the rapid growth of shale gas production in
different parts of the US. The technology of hydraulic fracturing is
developing fast, which leads to the decline of production cost and
increase of production volumes of unconventional gas. According to
many specialists, any growth of the US imports of LNG in the next
decade is very unlikely.
According to Mr. Medvedev, to fulfill this ambitious five-year
plan, Gazprom wants to use LNG from its Sakhalin-2 project and get
more gas by swapping its pipeline deliveries in Europe. However, the
main portion of the Sakhalin-2 production will be sold in Asia. To
reach the target of 66 bcm, the Russian behemoth would need to swap
about 60 bcm a year, or six times the US imports of LNG in 2008!
The US price is also not
encouraging. In July 2009, the average price of long-term European
contracts of Gazprom was $310-315/mcm, while
the
US paid for imported LNG just $130-159/mcm
(less than the cost of Russian gas delivered to the European Union).
A swap scheme will be unprofitable.
At the World Gas
Conference in Buenos Aires, the big players in the LNG market like
Repsol YPF, Total and Qatargas predicted the low
spot prices through the whole five-year period within which Gazprom
plans its expansion in the US.
According to Reuters,
the conference "was dominated by the grim realization that many
companies were completely wrong-footed by the unconventional gas
revolution and that spot gas prices could remain weak for years".
Apparently, Gazprom still does not want to believe the published US
statistics on the unconventional gas.
As Mr. Medvedev said, "There's a lot of myths about shale [gas]
production".
I must note that the
five-year plan of taking a 10% share of the American gas market
looks unrealistic even at the prices of 2008. Statements of this
kind undermine the business reputation of the management of Gazprom.
Mikhail Korchemkin
October 9, 2009 |
