I don’t question the resource base. The gas is there no doubt. But as with everything, the real question is how much it costs to get it out of the ground and to market. We still assume that gas from Russia is the cheapest as we use old Soviet times fields as our yardstick. But they are almost gone. The new fields are much costlier to develop. I have seen estimates that some of the new fields are so costly that anything less than USD10 in Europe will result in a sure loss. for the Russians. Why would Russia do so? Just imagine the world (Europe) finds out that Russia is not the safe bet it was in the past anymore.
Russia’s natural gas production rose to its highest ever last year, driven by increasing sales to Europe and rising domestic demand. Government data published Tuesday showed that output jumped 7.9 percent to beat a 2011 record. With a pipeline of projects including plans to expand into China and new liquefied natural gas plants, the country may close the gap on the U.S., which leapfrogged Russia to the top spot in global production of the fuel nine years ago.