Showing its deep, deep concern for the environment, Gazprom is warning about the hazards of natural gas fracking:
But in a sign the phenomenon is in fact being taken seriously, the board of directors at the world’s biggest gas producer, state-owned OAO Gazprom, this week highlighted environmental risks and the high costs of production in Europe.
“The production of shale gas is associated with significant environmental risks, in particular the hazard of surface and underground water contamination with chemicals applied in the production process,” Gazprom said in the statement following the board meeting.
Now surely, this has absolutely nothing to do with the fact that expanded gas production, especially in Europe, would be devastating for Gazprom. The experience in the US shows how quickly the gas market can turn. In 2006, the consensus prediction was that the US was facing a low supply-high price gas future, and that the country would be a gas importer. Gas prices were well north of $10/mmbtu. A few short years later, the US supply situation was turned on its head. Gas prices are now in the mid-$3/mmbtu range, and the play of the day is to figure out how to export gas to Europe and Asia.
LNG sourced from the Middle East or the US is already a near-to-medium term threat to Gazprom, as the ongoing disconnect between gas prices and oil prices (which determine the price of Gazprom gas under its long term contracts) indicated. Even a modest increase in production in Europe would put even more pressure on the company. And as the US experience shows, that increase can take place extremely rapidly (though for a variety of reasons such speed is unlikely in Europe).
Hence, it is doing what comes naturally to Sovoks: propaganda. It is pulling out all the stops to discredit shale and fracking, not just in Europe, but elsewhere. The next time you hear anti-fracking flacking, it’s fair to ask who’s paying for it. No, not all the opposition is from Gazprom: some is from the well-intentioned, some from those who reflexively oppose any kind of energy production. But knowing the way Gazprom works, no doubt some Gazprom money is funding anti-fracking lobbying, politicking, and information campaigns
But the enviro angle is really just too much. Sorry, but lectures on environmentalism from the direct descendent of the Soviet Ministry of Gas (the USSR being history’s largest environmental catastrophe), and a company with a pretty poor environmental record to boot (witness the huge problems with leakage from Gazprom pipelines), are enough to challenge the strongest gag reflex.
But the fact that the company feels compelled to engage in such risible hypocrisy is actually encouraging news. The more Gazprom execs squeal about shale, the more you know that it is a threat to them.
So yet again: Gazprom gripes–music to my ears.