Ukraine & Poland: The New Face of E.U. Natural Gas Production

May 14, 2013 08:53 AM


Ukraine and Poland are expected to lead European Union (E.U.) shale gas production by 2035, according to global consultants, A.T. Kearney. Present political relations and a common foe have knitted these two together in wake of a tumultuous history with Russian natural gas. The Ukrainian government is investing extra efforts into diversifying its energy sources, especially exploring domestic gas reserves. Such efforts may prove effective in gaining independence from expensive Russian gas.

Management consultant A.T. Kearney expects shale gas production in the region to reach 58 billion cubic meters by 2035, which is well over 12 percent of the total gas consumed by the E.U. in 2011. By that time the shale gas extraction in Europe should account for 45 percent of the total gas production in the region.

"The business with shale gas is a long-term, capital-intensive and risky project," commented the lead author of the A.T. Kearney study Kurt Oswald. The study also points out that shale gas deposits development will not be profitable in most countries until 2017-2018 since the production costs exceed its market price.

Ukraine's shale gas deposits of 42 trillion cubic feet (1.2 trillion cubic meters), according to the U.S. Energy Information Administration, are the third largest in Europe. The country's shale gas pools are recoverable and environmentally friendly, and they can serve as an energy source for Europe and the world's population in the future, as pointed out earlier by the former Italian Prime Minister and the former European Commission President Romano Prodi in his article for the Christian Science Monitor.

But farmers here at home have reason to celebrate the positive news, as well. Even as the Chinese oversupply of urea continues, favorable natural gas in Ukraine will filter down to nitrogen producers in that nation, and the savings could be passed down to growers in America. At the very least, increases in production margins will encourage urea and ammonia production, and even if the fresh supply is siphoned off to Indo-Asian and South American markets, world prices will respond to global supply forces. The result is likely to be continued urea and ammonia price favorability for producers upstream and at American supply points.

 Photo credit: Jedimentat44 / / CC BY



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