The US overtook Russia as the world’s largest natural-gas producer last year as operators tapped unconventional resources while demand in Russia plunged amid the country’s worst economic decline on record.
US output advanced 3.9%t in January through October to 18.3 trillion feet (519 billion cubic metres), according to the latest Department of Energy data.
Russian output, about four-fifths of which comes from state-run Gazprom, plunged 17% in the period to 462 billion cubic metres.
“Minimal hurricane disruptions and significant growth in production from onshore shale basins have contributed to the increase in domestic supply,” the Department of Energy’s Energy Information Agency said on its Web site last month.
The US growth trend may indicate that Gazprom will not be able to break into the US market as it had planned, Mikhail Korchemkin, head of East European Gas Analysis, said in a Bloomberg report.
Gazprom set a target to take as much as 10% of the US market by 2020 through LNG sales from Arctic plays, Gazprom executive Alexander Medvedev said in June.
The surprising boost shale gas has given US output has closed the world’s biggest energy consumer to some imports and “created a huge oversupply of LNG in Europe,” Korchemkin said.
In July, Qatari LNG prices in the UK fell as low as $75 per thousand cubic metres compared with Gazprom prices of between $210 and $220 per thousand cubic metres for countries in the European Union under long-term deals, Korchemkin said.
Gas deliveries from Norway and Qatar to Europe in the third quarter outpaced European growth in consumption while Russian exports lagged behind, according to the International Energy Agency.
European imports from Qatar more than doubled to 4 billion cubic metres in the third quarter from the same period the previous year.
Supplies from Norway rose 27% to 21.1 billion cubic metres while overall European imports grew 10% to 100.1 billion cubic metres, according to the IEA.
Imports from the former Soviet Union grew 8.6% to 32.6 billion cubic metres.
“There are winners and losers in the world gas business,” Korchemkin said.
“The losers are Gazprom, Nigerian National Petroleum Corporation, Turkmengaz” and NAK Naftogaz Ukrainy.
European imports from Nigeria fell 38% to 2.1 billion cubic metres in the period, according to the report.
Turkmenistan’s route to Europe was closed when Gazprom stopped purchases in April of this year.
Gazprom’s share of the European market may fall further as it refuses to show flexibility by giving a temporary price discount to European buyers, Korchemkin said.
This may result in Gazprom exports to Europe remaining flat at levels just above contractual minimums over the next five to 10 years while others take advantage of growth, he said.
Russia surpassed the US in gas production in 2002, pumping 539 billion cubic metres versus America’s 536 billion, according to figures from UK supermajor BP.
Russia, which has the world’s largest reserves and a quarter of Europe’s market, led the world in output from 1986 to 1996 and again in 1999, the year after the government defaulted on $40 billion of domestic debt and devalued the ruble.
The EIA said full-year US output probably increased 3.7% to the equivalent of 624 billion cubic metres.
The agency is slated to release November data on 29 January.
Russia’s annual output fell 12% to 582 billion cubic metres.
Demand for gas in Russia, the world’s largest user of the fuel after the US, contracted last year along with the economy.
Prime Minister Vladimir Putin said 30 December that annual gross domestic product declined 8.5%, the most since the collapse of the Soviet Union in 1991.
Industrial output fell about 11.5%, the Economy Ministry said last month.