Shale gas impact on energy deficit limited, says Deloitte

 Indian oil and gas companies are likely to actively explore investment opportunities in shale gas globally, though this is unlikely to have any impact on improving the gas deficit scenario in India in the near term, said the Deloitte Touche Tohmatsu Limited (DTTL) 2013 Oil and Gas Reality Check report released on Monday.

“Although there is lot of excitement globally about new conventional gas finds and also developments in the shale gas front, shale is set to remain a largely regional resource over the next one to three years with an uncertain global impact due to the increased technical challenges and higher development costs of the resource,” said Debasish Mishra, senior director, Deloitte India.

The study focussed on the primary challenges facing the oil and gas industry including shale gas, liquefied natural gas pricing, resource nationalism, national oil company expansion, and market complexity. “Despite considerable market changes, increased complexities, current challenges and new resource opportunities, there is a need to return to industry fundamentals  – namely supply, demand, macroeconomic, regulatory, cost price and competitive behaviour factors – in order to understand the future direction of the oil and gas sector,” said Adi Karev, DTTL Global Leader, Oil and Gas. The report noted that the success of North American shale gas has spurred interest in duplicating the results in other countries. However, these countries have a long road ahead before they can begin to see gas volumes and supporting infrastructure needed to dramatically lower domestic natural gas prices and create export opportunities. 

“Given the greater technical challenge of shale gas and higher development costs, exploitation of shale resources is not easily replicable in other markets. While some countries are making progress, over the next one to three years it will remain a largely regional resource with an uncertain impact on the global market past this timeframe,” the report said.