Gazprom Thinks It Will Steal 10% Of The U.S. Gas Market Since The American Shale Gas Revolution Will Fail

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Russia’s state-controlled giant Gazprom believes that its seaborne Liquefied Natural Gas (LNG) exports can take as much as 10% of the American natural gas market by 2020.

But isn’t U.S. shale gas technology promising an era of overly abundant American natural gas?

Perhaps, but Gazprom thinks that shale gas development efforts could fail:


“Shale gas and LNG are competitive in one price range,” Gazprom Deputy Chief Executive Officer Alexander Medvedev said in an interview in Paris yesterday. “The market will say who will be in the market and with what.”

The company has no reason yet to revise its target for U.S. 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.

U.S. 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 & Co. said in a report on Feb. 9. The unconventional resource is “a complete game changer” in the U.S., BP Plc CEO Tony Hayward said in January at the World Economic Forum in Davos, Switzerland.

Gazprom is waiting for “full clarity” on U.S. developments, and isn’t considering acquiring U.S. shale gas assets, Medvedev said.

So they’ll wait and see if shale fails or not due to environmental reasons in the U.S..

If it fails, they’ll ship LNG to the U.S. and go for 10% share. If it doesn’t then they’ll try and buy into U.S. domestic shale assets, but will probably end up paying a hefty price by then to take part.

The author owns shares of Chesapeake Energy (CHK), a shale play.

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