Shale gas will continue to remain a largely regional resource with limited impact on global markets over the next three years, says a Deloitte report.
According to the Deloitte Touche Tohmatsu’s 2013 Oil and Gas Reality Check report, this is because of increased technical challenges and higher development costs of the resource.
Debasish Mishra, Senior Director, Deloitte in India, said: “Although there is lot of excitement globally about new conventional gas finds and also developments in the shale gas front, it is unlikely to have any impact to improve the gas deficit scenario in India in the near term.”
“We expect Indian oil and gas companies to actively explore investment opportunities globally,” added Debasish.
The success of North American shale gas has spurred interest in duplicating the results in other countries. However, according to the report, given the greater technical challenge of shale gas and higher development costs, exploitation of the resource is not easily replicable.
While some countries are making progress, over the next one to three years shale gas will remain a largely regional resource with an uncertain impact on the global market past this time-frame, it said.
The study focuses on the primary challenges facing the oil and gas industry: Shale gas, liquefied natural gas pricing, resource nationalism, national oil company (NOC) expansion, and market complexity. On LNG pricing, the report says that oil indexation will be one of several approaches for long-term LNG contracts in the Asia-Pacific.
Recent development
On national oil companies, the report says these entities are evolving their global expansion by competing for “complex barrels” or, simply put, non-coventional oil and gas. While the global expansion of NOCs is not a new story, the fact that expansion strategies differ between oil and gas is a recent and important development.
NOCs have evolved from players focused on production in domestic oil resources to becoming interested in more “complex barrels” and are also pursuing gas, it says.
The direction in which US medium-size integrated companies, super majors, and NOCs have evolved shows that vertical integration, as the winning business model in the oil sector is far from becoming a market certainty, the report said.
richa.mishra@thehindu.co.in