OMV’s Gerhard Roiss makes the case for shale gas in Europe. He is right as Europe needs the resource and cannot allow itself to fall behind.
I was planning to have a post on shale gas for Europe in December but current news pushed me to this one. Those who know me will not be surprised that I am a big fan of shale gas developments in the US. I also have repeatedly asserted (since 2008 in fact) that shale gas is a good thing for Europe too.
In his last interview with the Wall Street Journal, OMV’s CEO Gerhard Roiss makes the case for European shale. And it’s a compelling one. Who can sensibly deny that coal is much more effectively destroying our environment and our health than the fracking necessary for producing shale gas will ever do?
In all fairness, Mr. Roiss has good reason to speak out for shale. His company is well positioned to take advantage of a future rush to drill for the hard to exploit resource. OMV is traditionally strong in what was once considered Eastern Europe. The company controls Petrom through which it is one of the hard to overlook players in the Black Sea region. The Black Sea in turn probably hosts the most prolific black shale reserves in Europe. Not to be sneezed at for an otherwise mid-scale oil and gas player.
One question is the future of the cozy relationship between OMV and Gazprom, the biggest gas exporter into Europe. Gazprom sees shale gas as the single biggest threat to its existence and Mr. Roiss’s remarks won’t do much to assuage their fears.
Another question will also be the fate of the contentious Nabucco project. If OMV starts developing all this shale in the Black Sea, natural gas supply from the Caspian and the Middle East will relatively decline in importance. But a pipeline exporting the gas towards the west will still be needed. Will that be the much-touted shorter Nabucco?
Transporting shale towards the west would only necessitate a pipeline from Romania to OMV’s hub at Baumgarten. Not only a much shorter route, it also avoids dealing with unruly Turks on the way. Let’s not forget that the original Nabucco proposal stretched for half its way through Turkish territory.
Mr. Roiss inherited the much-derided Nabucco project from his predecessor Mr. Ruttenstorfer. Bringing lots of shale gas to Baumgarten would give the shortened version of this project real economic sense and make Baumgarten THE gas exchange point of Central Europe which OMV has always wanted. This is of course pure speculation but if true that would be no mean feat for Mr. Roiss.