Gas market goes global

Within the past week, Russia’s energy giant OAO Gazprom has announced it is delaying the development of the Shtokman natural gas field, while at the same time trotting through major investment centres saying the company is poised for growth. Is it another sign of the rapidly changing nature of the world’s natural gas markets or a fresh instance of Russia looking to flex its muscles using its natural resources?

One of the reasons given for the decision was the shale gas phenomenon in North America that has effectively decimated the need for imports of liquefi ed natural gas.

But the very fact Russia is making a decision to delay the development of a massive natural gas field as a result of what’s happening halfway around the globe potentially speaks volumes that the market for the commodity is moving slowly but surely from being continental to one that is global.

Russia — and its two partners in Shtokman, Norway’s Statoil and France’s Total — have correctly read the writing on the wall and concluded the cost of developing this technically demanding field in the Russian Arctic simply can’t compete with what it costs to bring on production from U.S. shale plays.

Calgary Herald