BULGARIA
THE STREET POLITICS
OF OIL AND GAS
If the street doesn’t like shale, PM Boyko Borisov (right) won’t like it, either
PICTURE: PARLIAMENT OF BULGARIA
Bulgaria’s ruling party banned fracking upon seeing street protests against the technology. With elections looming next year, the ban looks set to remain and shale gas development stalled. Shale gas development continues to suffer setbacks due to the populism of Citizens for European Development of Bulgaria (GERB), the ruling party led by the prime minister Boyko Borisov. It’s unlikely that the GERB-enforced ban on hydraulic fracturing (fracking) will be reviewed, let alone lifted, before the summer of 2013, when the next parliamentary elections take place. The popular support for GRB is hovering at 20-22 percent, but the opposition’s has been rising in the polls recently. Bulgaria is only able to cover 15 percent of its overall domestic gas consumption of 2.5-3 billion cubic meters (bcm) annually thanks to the exploration and production (E&P) efforts from British company Melrose Resources (now merged with Petroceltic). The remaining 85 percent of Bulgaria’s gas demand is covered by Russia’s Gazprom. “I think that Bulgaria is just going to waste a lot of time [because of the fracking ban]. We eventually will have to explore the potential shale gas plays to determine whether the gas
is there and whether the production is possible in the future,” said Valentin Stojanow, a consultant and a former advisor to the energy policy committee in the Bulgarian parliament. He adds that prospecting bears little risk whereas the risks of production keep getting less significant as technology advances. Critics of Mr. Borisov charge the prime minister with making strategic energy decisions under the pressure of street protests. This year’s rallies against shale gas E&P in Bulgaria gave grounds for Mr. Borisov - ever sensitive to the vox populi - to go ahead with the ban on fracking that in turn led to US oil and gas major Chevron to give up on shale gas in Bulgaria. Political will is lacking in Bulgaria and the country’s oil and gas sector isn’t keen to embrace shale gas, either. Bulgaria’s national gas company Bulgargaz could lead the effort to develop shale gas but is heavily in debt - to no other creditor than the monopolist supplier Gazprom. Nikolay Marchenko in Sofia
BRAZIL
AMAZONIAN
After discovery of huge oil reserves offshore, Brazil is now looking at shale gas as a means to complement the country’s ambitions to become a regional oil and gas power. Brazil’s giant pre-salt oil and gas reserves have long overshadowed its promising shale reserves but Royal Dutch/Shell announced plans last month to drill the country’s first shale gas well. The plans were announced by Andre Araujo, Shell’s president in Brazil. The company will target the Sao Francisco basin in the state of Minas Gerais in the south east. “We’ve done our seismic work and we’ll drill our first well next year,” Mr. Araujo told reporters at an oil and gas conference in Rio de Janeiro. KPMG, a consultancy, reckons that Brazil has the potential to be the second biggest shale producer in Latin America and the US Energy Information Administration ranks Brazil as one of the world’s most promising regions, with shale gas reserves estimated at some 6.4 trillion cubic meters of shale gas. That is less than a third of the reserves in neighbouring Argen-
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PICTURE: PRESIDENTIAL OFFICE OF BRAZIL
APPETITE President Dilma Rousseff , the driving force of Brazil’s oil and gas push tina, and well behind the US and China, but still more than Poland, one of the leaders in shale gas prospecting outside of the US. Brazil’s National Oil, Gas and Biofuels Agency (ANP) has highlighted shale gas deposits in three onshore sedimentary basins – Parnaiba, Parecis and Reconocavo – but Sao Francisco is considered the new frontier in a country where the industry first flirted with shale more than half a century ago. Brazil also has large shale oil resources. Shell says it is too early yet to estimate potential production, but the exploration comes in at a moment when the company’s gas production is on the way to overtake its oil output.
Brazil is also starting to lay the foundations for a future ramp-up in shale gas: politicians have acknowledged the country must improve the regulatory framework, and have been studying the US approach in the hope of learning lessons. ANP is, too, conducting an in-depth survey of the country’s shale gas potential. “Brazil is committed to developing its shale gas resources, but production will likely be slow to come,” Marco Antonio Almeida, secretary of oil, natural gas and biofuels at Brazil’s mines and energy ministry, said after talks with visiting officials from the International Energy Agency. Jude Webber in Buenos Aires