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Форум (главная) » Financial markets today » Статьи, события, новости, слухи... » Gazprom Biggest Loser as Shale Gas Upends World Markets
Gazprom Biggest Loser as Shale Gas Upends World Markets
RafaleДата: Четверг, 28.06.2012, 15:10 | Сообщение # 1
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By Anna Shiryaevskaya - Jun 22, 2012 6:41 PM GMT+0300

The natural-gas boom reshaping America is rocking Russia, where state producer OAO Gazprom (GAZP) is slow to react and at risk of becoming the world’s biggest loser from the new technology to drill shale rock.

The U.S. no longer needs Russia’s gas, leaving President Vladimir Putin fighting to salvage Gazprom’s $20 billion Shtokman project in the Arctic. China, the biggest energy consumer, is exploring its own shale reserves and hesitating to accept a pipeline from Russia. Gazprom’s shipments fell about 14 percent so far in 2012, and the stock has lost 9.6 percent.
Enlarge image

Gazprom Chief Executive Officer Alexey Miller yesterday held talks there with chiefs of France’s Total SA and Statoil ASA of Norway as the partners in the Shtokman project aim to reach a new shareholder accord and decide on its fate by month’s end. Photographer: Simon Dawson/Bloomberg

Russia, with about $13 trillion of gas deposits, has the most at stake in the energy revolution that’s blasting shale from Pennsylvania to China in rocks impossible to drill just a decade ago. While Gazprom remains the gas biggest producer, the export monopoly is set for its toughest market since the Soviet Union’s fall in 1991 after letting rivals like Exxon Mobil Corp. (XOM) take the lead in a technology that’s eroding its sales.

“Gazprom is taking what seems to be a ‘head in the sands’ position on shale gas,” said Andy Flower, a former BP Plc (BP/) executive who’s now a consultant on the global gas market based in Surrey, England.

Putin in April urged Russia’s energy companies to “rise to the challenge” of shale. Afterward he coaxed partners in the Arctic Shtokman project to move forward, in comments before the start of this week’s St. Petersburg Forum of global executives. Gazprom Chief Executive Officer Alexey Miller yesterday held talks there with chiefs of France’s Total SA (FP) and Statoil ASA (STL) of Norway as the partners in the Shtokman project aim to reach a new shareholder accord and decide on its fate by month end. Total and Statoil hold 49 percent of the project.
Hits Growth

Gazprom “will take some pain to adjust” to the shale-gas revolution, said Ben Montalbano, a senior research analyst at the Energy Policy Research Foundation in Washington. “It hits production growth prospects, pricing power and revenues.”

The Moscow-based company’s earnings per share will drop 10 percent in 2012 to 56.9 rubles, according to analyst estimates compiled by Bloomberg. That contrasts with a 6.3 percent median gain among 63 oil and gas producers on the Bloomberg World Oil & Gas index. Gazprom shares have fallen 57 percent since reaching a record high in 2008, while the index lost 41 percent.

The stock dropped 0.7 percent today to close at 154.94 rubles in Moscow.

Gazprom downplays the threat from shale on global gas markets, saying European demand will hold up and the collapse in U.S. prices caused by a glut is temporary.
Shale Gift

“Shale gas is a gift for the entire gas industry, because it effectively removed a question of potential depletion of reserves,” Sergei Komlev, head of pricing at Gazprom’s export unit, said in an e-mail. “But a common view that shale gas is cheap is wrong.”

Should Gazprom founder, Russia could follow. With most of its contract prices pegged to oil, which has fallen about 15 percent this year, its profit outlook weakened.

Last year, Russia’s largest company boosted sales 29 percent to a record 4.6 trillion rubles ($141 billion), as benchmark Brent oil prices climbed 13 percent. It led oil and gas companies in providing about half of state revenue. This year, sales are forecast to climb 6 percent.

Forged from the Soviet Union’s gas ministry after the collapse of the communist regime in 1991, Gazprom has been accused of carrying out government policy in using its supplies to assert Russian power. Shipments to neighboring Ukraine were repeatedly halted since 2006 in disputes over energy prices. Russia holds the world’s biggest reserves, equal to 21 percent of all known deposits.
Overtake Russia

Shale production allowed the U.S. to overtake Russia as the largest gas-producing nation in 2009 after explorers began employing hydraulic fracturing, a technique using pressurized water with chemicals and sand to open cracks in rock for freeing gas.

The subsequent collapse in prices, which touched a 10-year low in New York in April, killed the U.S. as an export market for Shtokman and other liquefied natural gas projects. The U.S. will even become a gas exporter as early as 2015.

Gazprom can’t look to Europe for relief. It supplies about 25 percent of gas demand by pipeline, though the market is shrinking as the economic crisis undermines demand. Shipments are down 14 percent this year.

Nations dependent on Russian gas, such as Ukraine and Poland, are starting to assess their own shale gas potential.

“There is always the possibility that the shale gas revolution may, in the long run, produce less gas than some are now forecasting, but I think the probability is very low,” Flower said.
Strategic Challenges

Shale gas output in China and the U.S., and to a lesser extent Europe, “creates strategic challenges for existing gas exporters,” the International Energy Agency said in a report on May 29. The share of Russian and Middle Eastern producers in the international gas trade may decline to 35 percent in 2035 from about 45 percent in 2010, the IEA said in a report on unconventional gas.

Gazprom’s weakening position undermines its ability to link gas-export prices to oil, a device that’s kept prices in Europe above U.S. levels. Under pressure, the company agreed to offer discounts to some customers, such as GDF Suez (GSZ) SA and Eni SpA, while pursuing arbitration and talks with EON AG and RWE AG (RWE)’s units and Poland’s PGNiG earlier this year.

“It will take several years before we know the full potential of European and Chinese shale, but if either one even partially pans out, it will significantly reduce demand for Gazprom gas, particularly at oil-linked prices,” Montalbano said.
More Sanguine

The company still expects volumes to Europe to remain unchanged this year and revenue supported by higher oil prices. Gazprom estimates export revenue from sales to Europe will rise this year to $61 billion from $57 billion last year, approaching the record $64 billion in 2008, Deputy Chief Executive Officer Alexander Medvedev said on June 20.

Still, the transformation of the global gas market has already pushed Gazprom to delay the Shtokman project in the Arctic, which was expected to ship 90 percent of fuel to the U.S. Meanwhile, rival exporters Qatar and Australia have expanded capacity to allow them to ship fuel to Asia, which has the highest gas prices in the world.

While Russia is expected to maintain its role as the “Saudi Arabia of gas,” the country will increasingly have to compete with the U.S., according to Maria van der Hoeven, executive director of the IEA.

“It’s not only shale gas itself, but shale gas technology,” she said yesterday. “Several countries that are import-dependent have recognized their unconventional gas potential and promising developments are taking place in China and Poland.”


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