The World Policy Institute understands that policymakers and opinion leaders need creative ways to catalyze innovation and engage wider coalitions in solving some of the world’s biggest challenges. By working with artists focused on the same issues, this cross-cutting initiative seeks to build a new, collaborative model for social change.
In Every Nation for Itself: Winners and Losers in a G-Zero World, World Policy Institute Senior Fellow Ian Bremmer illustrates a historic shift in the international system and the world economy—and an unprecedented moment of global uncertainty.
By Artur Kluz
Shale gas fields have revolutionized the global energy sector, potentially ushering in a new “Golden Age of Gas.” According to the Institute for Energy Research, total recoverable natural gas resources in the U.S. are estimated at 4.244 quadrillion cubic feet. This is more than in Russia, Iran, Qatar, Saudi Arabia, and Turkmenistan—combined. The U.S. Energy Information Administration (EIA) states that initial assessments identified 862 trillion cubic feet of recoverable shale gas resources in the United States. This shale gas revolution will be replicated elsewhere, and in Europe, there is one clear winner—Poland—and this will transform the region’s balance of power.
Poland is recognized as one of the leaders in this field and has some of the largest deposits of shale gas in Europe. Like the U.S., the country is positioned to reshape the energy sector. Poland’s shale oil resources together with its conventional fields could provide the equivalent of 360 to 440 years of oil at Poland’s current production level. According to the Kosciuszko Institute, the Polish shale gas industry could create over 155,000 new jobs within the next 10 years, and Conoco Philips, Chevron, Marathon Oil, and others are exploring these reserves in Poland. The discovery of recoverable shale gas could make Poland a major shale gas exporter, improving its economy while helping it—and its European neighbors—decrease dependence on Russian oil.
Today, Poland relies on domestic coal resources and gas from Russia, but this won’t be the case for much longer. At an April 2010 press conference, Polish Foreign Minister Radosław Sikorski remarked, “Because of shale gas, in 10 to 15 years, Poland has a chance to become a second Norway.”
Poland wants to attract investors, and thanks to its status as Europe’s fastest growing economy, it will likely succeed. According to Ernst & Young’s 2011 annual survey, Poland is the most attractive investment place in Europe. It should be no surprise the Bank of China opened a Warsaw office in June. It was also the only country in the EU that avoided the financial crisis and maintained GDP growth over 4 percent. At the same time, Poland is fast becoming a leading business incubator: In 2011, 47 percent of Europe’s IPO listings were filed on the Warsaw Stock Exchange.
About $625 million was invested in Poland to search for unconventional gas deposits in recent years, and, according to the Polish Ministry of the Environment, 38 foreign companies will drill new wells in search of shale gas this year. Poland’s largest oil and gas exploration and production companies have formed strong ties with U.S. and Canadian companies that possess the technology to increase its access to drilling expertise.
However, the policies that enabled the shale gas revolution in the United States do not exist in the European Union. Strict EU regulations regarding environmental issues and water do not support the growth and development of the shale gas industry. The EU Commission has shown no willingness to invest in R&D for shale gas, arguing that the market should develop shale gas. According to Chatham House’s research, the European gas market has relatively few sellers and buyers, poor price transparency, and high transactional costs. Drilling a shale gas well in Poland still costs three times as much as in the U.S. due to a lack of competition. However, improving shale gas infrastructure, bringing technology from U.S. and Canada, and creating fully transparent and mature market will quickly change this situation, especially with Europe desperate to become energy independent from Russia.
There is no doubt the shale gas revolution will have a huge impact. Poland has the potential to become a global shale gas expert, transferring its knowledge to countries around the world. The development of advanced shale technology could marginalize the Russian energy sector, decreasing Russian oil and gas firm Gazprom’s pricing power and its profits. This marginalization would be compounded in 2016, when the U.S. and Canada plan to start exporting their own liquid shale gas. With the introduction of shale gas into the market, the fear of Russia turning off its oil spigot could disappear. This threat has held Europe hostage for years, and the exploitation of shale gas in Poland could finally free the EU to take a tougher stance against Russia.
Artur Kluz is an attorney, international affairs expert and entrepreneur, partner at Metropolitan Capital Solutions.
[Photo courtesy of wcn247]
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