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Peter Voser: cheap shale gas is a myth

Screen Shot 2013-03-23 at 09.15.15Shale gas will not change energy pricing structures across the world, according to the chief executive of Shell

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By , in Geoje, South Korea: 8:30PM BST 16 Oct 2013

It is a “myth” that exports of cheap shale gas from America will cut gas prices in Europe and Asia, Peter Voser, chief executive of Royal Dutch Shell has warned.

America is sitting on a glut of shale gas that has seen prices plummet to as little as a third of UK prices. It is now in the process of developing export terminals where the gas will be cooled for shipping abroad as liquefied natural gas (LNG).

UK politicians have hailed the prospect of Britain importing cheap gas from the US as one solution to help consumers struggling with rising energy bills as domestic gas production dwindles.

But Mr Voser said that the idea of “cheap US gas going into the rest of the world and therefore changing the pricing structures across the world” was a “myth”.

The price impact of US exports would be “not that significant” because the additional costs of liquefying, transporting and then re-gasifying the gas would mean its eventual cost was comparable to existing market prices, he said.

Earlier this year British Gas owner Centrica struck a £10bn deal to export LNG from the US, welcomed by David Cameron, the Prime Minister, who claimed that “future gas supplies from the US” would help provide British consumers with a new “affordable” source of fuel. Former energy secretary Chris Huhne last month urged the UK government to pressure the US to allow more exports, which he claimed would “gradually equalise the gas price in the US with the rest of the world” and help reduce UK prices.

US benchmark gas prices are currently about $3 to $4 per million British thermal units, having dipped below $2 last year.

But Mr Voser said that while US gas might cost between $4 and $6 – Shell’s assumption of longer-term prices – it would arrive in Europe at a cost of $8 to $10, comparable with European prices that have averaged between $6 and $11.

Shell has repeatedly played down the prospects for shale gas development in Europe and the UK.

It has shunned involvement in the embryonic UK shale industry – which the Prime Minister has also suggested will cut energy bills.

It is involved in shale gas exploration in other areas like China but Mr Voser said that Chinese shale gas would be consumed by the country’s domestic gas market and would not “alter the pricing mix and the volume in Asia-Pacific”.

Mr Voser was speaking to The Daily Telegraph in Geoje, South Korea, where the company is building a huge floating LNG plant.

He is due to retire from Shell at the end of March 2014 after 29 years with the company, and will be replaced by downstream director Ben van Beurden.



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