Shale Gas in Europe: Poland and Ukraine as Pioneers

Ukraine will take a first major step away from dependency on Russian gas supplies on Thursday when it seals a $10 billion shale gas deal with Royal Dutch Shell. Due to be signed at the World Economic Forum in Davos, the production sharing agreement will mark the biggest contract yet to tap shale gas in Europe and the largest single foreign investment in the former Soviet republic.

LONDON — Britain lifted its ban on shale gas exploration on Thursday as it aims to become a European leader in a sector that has transformed the U.S. energy market and counter a fall in the UK’s natural gas production. The green light on shale gas fracking from Energy and Climate Change Secretary Edward Davey comes approximately a year and a half after UK authorities halted the unconventional exploration after the process set off earth tremors at one site.

By Qineqt:Last week, Shell started exploring shale gas in Turkey. We believe this will have a significant impact on Turkish economy, Shell's bottom line (if the exploration is successful) and Russian gas companies.

Craig Pirrong submits: Some weeks ago I opined that it was foolish for Poland to lock itself into a very long term contract with Gazprom (OGZPY.PK) (going out to 2037) given the prospects for shale gas. I did a little digging (or should it be drilling?) for information on shale gas prospects in Poland, Ukraine, and elsewhere in Europe, but other things (e.g., life) intervened and I didn’t follow up.

MOSCOW — Russia’s top crude oil producer Rosneft wants to break the monopoly of another state-owned energy champion, Gazprom, to export gas via pipelines, sources said on Friday, signalling a flare-up between powerful clans. Igor Sechin, a long-standing ally of Russian President Vladimir Putin, transformed Rosneft into the world’s top publicly traded oil producer through the US$50-billion purchase of Anglo-Russian firm TNK-BP last year.

<p>Poland is currently reliant upon natural gas imported from Russia. They shed the iron rule of the Soviet Union only to hand power back to Moscow due to their need for Gazprom’s products.

The next stage of the shale boom is underway…overseas. While U.S. producers are going gangbusters – shale oil and gas production are way up year over year – the rest of the world is getting its collective act together. Where’s the next Bakken or Eagle Ford? It’s time to think globally….

By Katchum:I noticed that the spot natural gas price in the US is going down, while the Russian natural gas price is going up. Both natural gas prices started at US $290 per thousand cubic metres in the beginning of 2007. Today Russian natural gas is 4 times more expensive than US natural gas. Click to enlarge images.