European Shale Gas: A Threat to Gazprom’s Future? by GlobalData

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European Shale Gas: A Threat to Gazprom’s Future?

Summary

Gazprom has long dominated the European natural gas market, meeting a significant portion of the gas needs in the continent. The company has been able to command a good price for its natural gas by linking its gas prices to oil prices as per its pricing policy. However, the successful US shale gas development might be replicated in Europe, which will threaten Gazprom’s status as a dominant European gas supplier. The US shale gas discoveries and their enormous potential have led gas prices to fall tremendously to around $4.16 per million Btu in 2009. This may lead to Europe becoming a self-sufficient natural gas producer in the years to come. Additionally, increased shale gas development might lead to continuously reducing natural gas prices in the future. As a result, Gazprom’s exports to Europe may be reduced or become less profitable. The company might have to develop a proper pricing arrangement based on spot prices with Europe. The company is therefore making some significant adjustments to ward off the challenges it might have to face if Europe successfully develops its shale gas.

Scope

- Analyses the impact of Shale Gas' rising prominence in Europe on Gazprom
- Discusses the emergence of shale gas globally and Europe in particular
- Discusses how gazprom has a dominance in the European Gas Market
- Discusses how Shale gas' success in the US can be replicated in Europe

Reasons to buy

- Understand the development of shale gas in Europe
- Gain understanding of the impact of shale gas development in Europe on Gazprom being a significant European gas supplier
- Gain understanding of how Gazprom caters to the European natural gas requirement
- Develop an understanding of how Gazprom is adjusting to the developement of shale gas in Europe

More Info
									                     European Shale Gas: A Threat to Gazprom’s Future?
       Reference Code: GDGE0637VPT                                                                                                          Publication Date: JUL 2010


       1         Table of Contents                                                                  2       Summary
       1 Table of Contents.................................................................1        The European gas market might witness a significant transition
        1.1 List of Figures................................................................1        if shale gas is developed successfully in the next two to three
       2 Summary .............................................................................1     years. Europe’s natural gas demand has long been met by
       3 European Shale Gas: A Threat to Gazprom’s Future? ........1                                Russian supplies of which Gazprom supplies the majority. This
        3.1 Western Europe Relies on Indegenous and Algerian                                        has enabled Gazprom to achieve a near monopoly in the
             Production While Eastern Europe is Dependent on
                                                                                                    continent with significant revenue potential. The company has
             Imports ..........................................................................1
        3.2 European Natural Gas Demand: A Significant                                              initiated new gas pipeline projects such as the Nord Stream
             Contributor to Gazprom’s Revenues .............................2                       pipeline which it aims to develop successfully in significantly
        3.3 Shale Gas: A Revolution in the Oil and Gas Industry… 3                                  less time than previous pipelines have taken to develop. With
        3.4 and the Revolution may Spiral into Europe As Well ......3                               these developments, the company can cater to some of the
        3.5 Europe: A Significant Shale Gas Producer in the Making                                  future Russian gas demand. However, the potential of shale
                   4
                                                                                                    gas in Europe is changing the dynamics of the gas market in
          3.5.1    Various Significant Shale Gas Plays are emerging
                   in Europe..............................................................5         Europe.
        3.6 Europe’s Shale Gas Success can Emerge as a Replica
             of the US’s Rising Shale Gas Business.........................5                        3       European Shale Gas: A Threat to
        3.7 Shale Gas may Restrain Gazprom’s Dominance in the                                               Gazprom’s Future?
             European Gas Market ...................................................6
        3.8 Gazrom is Making Significant Adjustments to its                                         Gazprom has long dominated the European natural gas market,
             Operations due to the Rising Prominence of Shale Gas                                   meeting a significant portion of the gas needs in the continent.
                   6                                                                                The company has been able to command a good price for its
        3.9 Shale Gas Development may be Significantly Impacted                                     natural gas by linking its gas prices to oil prices as per its
             due to Higher Drilling Costs as European Government                                    pricing policy. However, the successful US shale gas
             Looks Elsewhere ...........................................................7           development might be replicated in Europe, which will threaten
       4 Appendix..............................................................................8
                                                                                                    Gazprom’s status as a dominant European gas supplier. The
        4.1 Methodology..................................................................8
          4.1.1    Coverage..............................................................8          US shale gas discoveries and their enormous potential have led
          4.1.2    Secondary Research............................................8                  gas prices to fall tremendously to around $4.16 per million Btu
          4.1.3    Primary Research ................................................8               in 2009. This may lead to Europe becoming a self-sufficient
          4.1.4    Expert Panel Validation ........................................9                natural gas producer in the years to come. Additionally,
        4.2 Contact Us ....................................................................9        increased shale gas development might lead to continuously
        4.3 Disclaimer .....................................................................9       reducing natural gas prices in the future. As a result, Gazprom’s
                                                                                                    exports to Europe may be reduced or become less profitable.
                                                                                                    The company might have to develop a proper pricing
       1.1       List of Figures                                                                    arrangement based on spot prices with Europe. The company
       Figure 1:   Significant Western European Countries, Natural                                  is therefore making some significant adjustments to ward off the
                  Gas Production and Imports in Bcf, 2005–2015 .......2                             challenges it might have to face if Europe successfully develops
       Figure 2: Significant Eastern European Countries, Natural                                    its shale gas.
                  Gas Production and Imports in Bcf, 2005–2015 .......2
       Figure 3: Gazprom Exports in Bcf, 2008–2009..........................2                       3.1    Western Europe Relies on Indegenous and
       Figure 4: Russian Pipelines to Europe, 2010.............................3                           Algerian Production While Eastern Europe
       Figure 5: Significant US Shales, Location Map, 2010................3
       Figure 6: Significant European Shales, Location Map, 2010 ..4                                       is Dependent on Imports
       Figure 7: Unconventional Reserves, Europe, Split by Type,                                    The European natural gas industry can be segregated into
                  2010 .........................................................................4   Western Europe and Eastern Europe. The Western European
       Figure 8: US, Shale Gas, Production Forecasts in Bcf, 2010–
                                                                                                    region is heavily dependent on imports from Algeria as well as
                  2014 .........................................................................5
       Figure 9: Natural Gas Prices ($ per Million British Thermal                                  producing some gas itself. This region includes some significant
                  Unit), 2005–2009 ......................................................7          countries comprising Denmark, France, Germany, Ireland, Italy,
       Figure 10: GlobalData Methodolo
								
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