Will Natural Gas Start the Next Cold War?
As the U.S. energy market continues to expand with the rise of hydraulic fracturing, or fracking, Russia is taking notice, and may be secretly scheming to undermine U.S. plans.
Russia has long been the dominating exporter of natural gas in Europe, but recently European countries have begun to envision a future with less Russian natural gas. With the rise in advances in drilling for gas buried in deep shale rock, the U.S. has stepped onto the natural gas scene in a big way. Russia has been exporting to countries all over the world for around $10 per unit, but the current price in the US is now $3 for the same quantity, naturally attracting the attention of many foreign companies and politicians.
This could mean bad news for Russia and Gazprom, Russia's state-controlled energy corporation and the world's largest producer of natural gas. The company already abandoned plans to develop a new arctic gas field, stating it couldn't justify the investment right now. According to the most recent financial report, Gazprom profits have dropped by nearly 25 percent.
Rumor has it that Russia is taking measures to stop U.S. fracking by bankrolling environmental groups to oppose it in Europe. These rumors are supported by the fact that Gazprom-owned media companies across Europe have run stories examining the environmental risks of fracking.
Fiona Hill, a Russia expert from the Brookings Institution also mentioned in a blog post that in a 2011 speech, President Vladimir Putin was never more engaged than “when he wanted to explain to us how dangerous fracking was.”
But Gazprom executives are quick to squash these accusations, claiming instead that the U.S. developments will actually help Russia and Gazprom in the long run by playing a role in expanding the global market for natural gas as the most environmentally friendly fossil fuel.
Sergei Komlev, head of export contracts and pricing for Gazprom, explained in an email to the AP that “the reason for remaining tranquil is that we do not expect the currently abnormally low prices in the USA to last for long.” Once that happens, Komlev continued, “it will make the U.S. plans to become a major gas exporter questionable.”
In other words, according to Gazprom officials, they do not consider the U.S. to be a threat and do not predict U.S. fuels will make their way to Europe on any important scale.
This comes contrary to what U.S. experts like Hill believe. “This is where everything is being turned on its head,” Hill said, “their days of dominating the European gas markets are gone.”+10
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