Gazprom top executives are to hold a key board meeting today as the
energy giant faces up to the possibility of losing the
U.S.
market.
Respected Russian business daily Kommersant reported on Tuesday that
abundant shale gas has made the
United States
,
the world's largest natural gas market, self-sufficient while surplus liquefied
natural gas undermines the competitiveness of Russian natural gas in
Europe
.
The lack of revolutionary ideas from Gazprom's management to reverse
negative trends jeopardizes the development of the huge Shtokman gas field in
the Russian Arctic, which was primarily designed to cater to the
U.S.
and Canadian markets, the paper said.
Gazprom deputy CEO Alexander Medvedev, who is expected to sum up the
results of the energy giant's 2009 operations, will confirm that Gazprom's
sales fell 11.4% last year to 140 billion cubic meters due to a slump in global
gas consumption. Medvedev earlier said Gazprom's export revenues were expected
to plummet to $40-42 billion in 2009 compared with $64 billion in the previous
year, the paper said.
In a report obtained by Kommersant, Medvedev points to additional
liquefied natural gas capacities in
Qatar
,
which built up its LNG production by 67% to 167 billion cu m last year, as the
primary reason for declining Russian natural gas sales in
Europe
.
According to the paper,
Qatar
's
cheap LNG flooded the European spot market from May to December 2009 while
natural gas on long-term contracts even in the last month of the year was twice
as expensive.
The situation for Gazprom is also aggravated by the so-called
'revolution' in gas extraction from non-traditional sources in the
U.S.
,
the paper said, referring to the report.
"Whereas several years ago, none of the companies known to us
predicted rapid gas production in the U.S., today virtually all companies speak
about the prospects of shale gas production - something that may radically
change the entire global gas market," the paper quoted the report as
saying.
The surplus of gas in the
United States
has redirected LNG supplies to European countries and presented Gazprom with
the dilemma of whether to continue investment into the Shtokman field, the
paper said.
Moreover, the old formula of gas pricing based on the prices of
petroleum products with a lag of nine months is yet another reason for
Gazprom's reduced sales compared with other competitors whose gas prices follow
developments on oil markets with a lag of six and even three months.
Mikhail Korchemkin, the head of East European Gas Analysis, told
Kommersant that competition on the global gas market would be tight.
"The main uncertainty involves shale gas reserves in
Europe
amounting to 15 trillion
cu m. Expenses on this gas production will determine European prices in the
next 10-15 years," he said.
"If Gazprom fulfills its entire program of building gas pipelines,
its transport expenses will not allow Russian gas to compete in
Europe
," the paper quoted
him as saying.