BUSINESS

Dr.Dimitar Ivanov

One of the most commented upon and observed global phenomena over the past years has been the European financial crisis. In addition to enormous public expenditure and its fiscal ramifications, the economic side of the question has to be examined as well. The recession has lasted a long time and led to reduced competitiveness in Europe. And this is one of the main reasons for the high prices of energy transmission, as well as the high-level of energy dependency in Europe. The significant changes which have taken place in recent years in the gas technology sector have changed this picture. The prices which shale gas has reached in the USA, of about 2.5mBu, were unthinkable only a few years ago. Notwithstanding the fact that shale gas is more difficult and more expensive to extract, it is distributed almost throughout the entire world, which is its major advantage. And this phenomenon is exceptionally important for the European gas market. The European market consumes annually more than 500 billion cubic metres, and the total conventional reserves of Europe plus Norway are about three trillion cubic metres. This clearly

shows that Europe can not satisfy its own gas needs in the long term, and the prices are about 3-4 times higher than those in the USA, Russia and other extraction places. At the same time it is almost certain that Europe has significant reserves of shale gas. Countries such as France, the United Kingdom, Poland, Rumania, Bulgaria and others can meet their gas needs for decades and centuries to come. The situation of the gas market in the Far East is not very different. Preliminary data suggests that the biggest reserves of gas are to be found in China, Australia, Canada, Argentina and

of more than 60 billion cubic metres. Gasprom began a major campaign a number of years ago to show that shale gas extraction is difficult and harmful for the environment. These claims, however, have been proven in practice. Despite this, eighteen months ago a temporary ban was imposed in the United Kingdom on the exploration and extraction of shale gas, while in France and Bulgaria there is a permanent ban. Opposition to the technological process, however, will not endure. The world has seen other similar campaigns but they have always been resolved in favour of new

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number of other places. This prospect is, of course, a matter of concern for traditional gas suppliers in Europe. First of these is the Russian giant, Gasprom, which at the moment satisfies 28% of European needs, and is also the primary supplier to Ukraine and Turkey, which are significant consumers of gas. Gasprom's plans are to increase their gas supplies to Europe to meet 40-50% of consumption. At the moment it has pipelines with a capacity of 250 billion cubic metres and it plans to construct a new pipeline through the Black Sea, Bulgaria, Serbia, Hungary to Italy with a capacity

technologies. In the Far East markets are clearer. China has begun a large-scale programme to explore and extract shale gas, effectively and rapidly investing huge free reserves of money into new technologies. We are sure to see announcements of significant breakthroughs by the end of the decade. The same can be said about Japan and above all Australia. The USA is also a likely candidate to start exports of liquefied gas in the future. The USA already has more than 100 000 drills and in the near future there will be a lack of drilling equipment. The technology of hydrofracking is also rapidly

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