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Gazprom vs Shalegas: The victory of the energy colossus

Commodities / Natural Gas May 08, 2010 - 03:57 AM GMT

By: Submissions

Commodities

Maninder Batra writes: Shale gas has been touted by the western media as a savior for the West and a silver bullet against Gazprom .In the past few years, due to extreme increase in prices of natural gas prices and betterment of Hydraulic fracturing ,Shale gas became economical .If we were to believe the western media hype and propaganda ,Shale Gas would ruin Gazprom ,a scenario which the anti-russian western media loves to drool over.


But the facts and recent events and happenings in the gas sector ,speak otherwise and show a different reality compared to what the western media says ,So, lets have a fact check- Recently, the spot gas prices fell to historic lows of around 4$/mcf. This proved to be the death kneel for the shale gas producers. Soon after these historic lows in spot prices ,Chesapeake , the second largest gas producer stated that it will not drill new shale gas wells, as the prices were not profitable for drilling new wells. The CEO of Chesapeake admitted that the current prices hovering at around 5$ & less do not generate adequate cash flows for even the best managed shale plays.

Similiarly, another major Shale gas producer in Canada, the Encana Corp stated that it will shut in supplies and withhold gas supplies from the gas market. On April 23,even a major American media outlet,Bloomberg Businessweek admitted in one of its articles that the current prices are below cost of production and this will stall the shale gas boom .

It seems that the shale gas producers have lost the gas wars they initiated against Gazprom.  Gazprom  won the gas wars with flying colours  and not only that it also made a profit of 24.33 billion$ this quarter which exceeded the profit of Exxonmobil ,and thus was rated by the Forbes as the world ‘s most profitable company in the oil and gas sector this quarter. Despite the cut throat competition in the gas sector ,Gazprom made a largest profit ,shows how resilient and tough Gazprom is ,quite opposite to what western media would want us to believe .Seems that Gazprom ‘s CEO Alexei Miller was correct ,when he stated that Shale gas is not a threat to Gazprom .      

By Maninder Batra

maninder300@hotmail.com

© 2010 Copyright Maninder Batra - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable,


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

cladd
08 May 10, 23:18
Shale Gas in Europe and Energy Independence from Russia

Only time will tell what the impact of emerging shale gas in opportunities in shale gas will mean for Europe and Gazprom. Those interested in learning more may wish to check out developments and opportunities in the emerging shale gas plays in Europe at www.shalegasforeurope.com


Man
10 May 10, 08:33
i disagree

shale gas is more expensive than PNG and LNG , the only thing that can challenge gazprom is LNG


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