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Joerg Kirsch: Prime cost of shale gas production to be more expensive in Germany than in US

10:17 | 16.09.2013 | Analytic

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16 September 2013. PenzaNews. Prime cost of shale gas production in Germany will be more expensive than in the United States. This opinion was expressed by Joerg Kirsch, Deputy Head of Division for International and External Energy Policy, German Federal Ministry of Economics and Technology.

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However, according to him, now there is no legal basis for shale gas extraction in Germany, and the authorities have not approved a relevant bill.

“Now we have proposals from interested companies and industry organizations on possible shale gas production,” he said.

Joerg Kirsch stressed that the leaders of the EU countries differ on prospects for shale gas production: for example, it is prohibited in France; but the government of Poland, by contrast, would like to start the extraction.

“Energy policy in the European Union is the choice of each EU country. EU leaders discuss the possibility of shale gas production, but every country makes its own final decision,” explained the representative of German Federal Ministry of Economics and Technology.

He also praised the reliability of Russia as a partner state engaged in a long-term gas transit.

“For over 40 years, Russia is Germany’s largest supplier of resources. In 2012, the country got 38.24% of gas and 37.15% of oil from Russia (in 2011 – 39.8% and 39.3%, respectively). The EU consumes about 25% of oil and gas from Russia. Each year, this figure is increasing. Russia reliably delivers natural gas, except the period of gas conflict of 2008–2009. The transit of Russian gas passes through Ukraine and Belarus. We believe that in the future gas supply will be uninterrupted and unceasing, though the EU will, of course, try to diversify the sources of gas supply. The example can be Nord Stream. German energy policy is based on the fact that there should be an autonomous direct flow to avoid dependence on transit countries,” said Joerg Kirsch.

Returning to the question of potential of shale gas production in Europe, he said that the main argument in its favor is to reduce dependence on foreign supplies.

“It is necessary to correctly calculate the reserves of shale gas for its further commercial production. At present there is no exact information concerning Germany’s shale gas reserves. It is necessary to do geological exploration drilling, after which it will be possible to assess the feasibility of such works. However, we can already say that the cost of shale gas production will be significantly more expensive than in the US. One of the main arguments against shale gas is significant environmental risk of possible release of methane gas into the atmosphere. And in any case, the balance of nature will be broken at the beginning of the work,” said the deputy head of Division for International and External Energy Policy, German Federal Ministry of Economics and Technology.

He also reminded that in some European countries such as France and Bulgaria, there is a moratorium on shale gas production, so any talks about its extraction there are premature.

“As has been already noted, the first step for the beginning of shale gas production should be exploration that will help to determine its potential profitability; however, these developments have not started in Germany yet,” Joerg Kirsch emphasized.

In addition, he commented on the prospects of the Third Energy Package (TEP).

“The Third Energy Package is implemented within the European Union and the European Energy Community. Foreign companies that want to enter the European market must comply with the TEP requirements, all the provisions of the agreements in each individual country – the EU partner. One of the most urgent problems is the condition for the use of OPAL gas pipeline; the talks on the issue are conducted between the European Union and the Ministry of Energy of Russia,” Joerg Kirsch concluded.

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