BRUGES, Belgium, April 24 (RIA Novosti) – The European market for US shale gas is unlikely to yield big profits as Europeans would have to raise prices to withstand competition from Asia, Russian EU envoy Vladimir Chizhov said Thursday.
Speaking at the College of Europe in Belgium’s Bruges, Chizhov said natural gas prices in Europe are higher than in the United States, but lower than in Asia. Therefore, US shale gas has better prospects on the Asian market, if the US issues new export licenses.
Under market economy rules, shale gas is more likely to be exported to those markets where prices are "more interesting," namely to Asia, Chizhov said.
If Europe wants to compete with Asia for US gas, it will have to offer "much more attractive prices" that would complicate the balance between the competitiveness of the European and Asian economies, he said.
Europe could benefit from the export of the US gas, he added. The arrival of gas from the US to the world market will not drop gas prices in Europe, but would lead to an increase of gas prices in the United States. As a result, US industrial production would become more costly, which could reduce US-EU market imbalances, he said.
No matter the destination for the shale gas from the US, Russian gas is in a secure condition to preserve its position in Europe, the Russian diplomat said.
A recent report by Transparency Market Research showed that the global shale gas market is expected to reach 17.2 trillion cubic feet in 2019, although the cost of production and contamination of surface water are expected to hinder its market growth in the near future, the study said.
Shale gas is natural gas that is found trapped within shale formations. Shale gas has become an increasingly important source of natural gas in the United States over the past decade. Currently, only the US and Canada are producing shale gas in commercial quantities.