Russian giant Gazprom said that the United States liquefied natural gas (LNG) was not globally competitive due to the high production costs.
In this respect, the majority of international experts believe that the active LNG plants in the United States will not be used to their full capacity in the coming years, Gazprom said in its review of the shale gas prospects and LNG sectors around the world.
Speaking further of the US LNG prospects, Gazprom noted that only one final investment decision for a new LNG project was made in the U.S. in the period from the second half of 2015 to the present. This is indicative of the dwindling interest in U.S. LNG on the part of buyers, especially in the countries that can import pipeline gas.
In 2016, the increase in shale gas output in the United States was marginal, while the total U.S. gas production showed negative growth for the first time since 2005. Economically speaking, the shale industry has yet to turn a profit, which adds to the debt burden of shale producers. Given the current production dynamics, the U.S. gas output may drop even lower by the end of 2017.
In Europe, US LNG accounts for less than 1 percent of the total amount of gas consumed by European countries in the course of this year.
The company also noted that Canada’s shale gas sector continues to develop at a very slow rate due to limited possibilities for monetizing gas and the availability of other, cheaper gas resources.
Despite the positive outlook, China’s shale industry is lagging behind the stated objectives. The only way to achieve robust growth is to discover a large number of substantial deposits and to considerably reduce production costs in the shale gas sector. Most experts maintain, however, that the Chinese shale industry will not affect the country’s growing dependence on gas imports in any significant manner.
The review notes that the largest growth in LNG consumption over the next 20 years was expected in Asia-Pacific. Europe will also experience an upturn in gas imports, chiefly due to a decline in indigenous production, which is also expected to spur the demand for Russian pipeline gas in the European market.
With LNG demand on the rise, Gazprom is making further efforts in this line of business. Documentation is being compiled for the third train of the LNG plant on Sakhalin Island (Sakhalin II project). The company also signed the heads of agreement to set up a joint venture for the purposes of implementing the Baltic LNG project with Shell, Gazprom’s strategic partner. An LNG production, storage and shipment complex is being built in the neighborhood of the Portovaya compressor station.