Gazprom: Weak Prices to Cause Decline in U.S. Shale Gas Production

Natural shale gas production in the United States, the world’s largest producer, is expected to decrease due to low prices, a Gazprom company manager said on Friday, according to Reuters.

The Russian energy giant’s deputy CEO, Oleg Aksyutin, told the company’s inhouse magazine that U.S shale gas producers will start reducing output “in the nearest future”.

He said a decline in output is warranted by falling natural gas prices at Henry Hub, the benchmark delivery point in Louisiana, to the mark of $85 per 1,000 cubic meters.

The Gazprom manager said the prices there averaged at $76 per 1,000 cubic meters in January.

He added that weak crude oil prices could also have a negative impact on natural gas prices.

Earlier this month, Gazprom said it expects European gas demand, dented by the coronavirus crisis, to start recovering from the third quarter, according to Renaissance Capital. 

Renaissance Capital wrote in a note that Gazprom said the drop in European demand accelerated in recent weeks due to the coronavirus-related lockdowns and warm weather, while power generation demand did not fall due to switching from coal

“With China resuming LNG imports in March, Gazprom expects the lockdown roll-over will result in European gas markets resuming growth in 3Q-4Q 2020,” Renaissance Capital said.

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