US Shale Boom to Burst Soon

Gazprom CEO Alexey Miller dismissed the current energy boom in the United States as a soap bubble that is going to burst soon. He said that the US is not a competitor of his company. He added that there are no projects that would make shale gas profitable.

Vagit Alekperov, president of Lukoit, also dismissed shale drilling made by the United States. He said that it is an achievement for US engineers that the country is now producing gas and oil from shale. They do it via drilling tricky wells and hydraulic fracturing. While it is an achievement, he doesn’t consider it as a revolution.

The comments made by the executives could easily be dismissed as corporate bluster. It is the same as the talks given during the Bush administration when Russia celebrated every misstep the US made in Iraq and European relations.

But the comments made by Miller and Alekperov should not be taken lightly. It shows the tables have turned. During the Bush administration, Russia was leading in the energy sector and the United States was on its heels. At present, Russia is worried about how much shale gas from the United States will hit Russia’s energy industry, which is the only source of the country’s economic strength.

In 2000, shale gas was only one percent of the natural gas production in the United States. By the year 2010, it went up to 20 percent. Some analysts predicted it would go up to as high as 46 percent in 2035. This is what Paul Stevens, an expert in oil and energy, said in The Shale Gas Revolution.

Both Alekperov and Miller are in their present positions in Russian business because of their close ties to Vladimir Putin, the Federal Security Service, and the Kremlin. Politics and the energy sector are intertwined in Russia. Since Putin’s presidency, Russia used its energy industry to exert its political will.