Shale Gas Consortium
Idea brief
Situation in Europe
•
Europe – is one of 3 most promising regions (next to US and
China) for shale gas production:
– Developed industries and large population, strong deficit of its own
energy resources
– 500+ bln. cub. m consumption, gas prices are at all times high (3-4 times
higher than in US)
– Dependent on two politically unstable regions: Middle East (Qatar, 40%
of supplies) and Russia (30%)
– Large undeveloped shale gas reserves, primarily in Poland, Ukraine,
Romania, Bulgaria
•
•
•
•
Poland alone est. recoverable shale gas reserves ca. 146 Tcf (EIA)
Ukraine 128 Tcf
Romania 51 Tcf
Energy independence proclaimed as a strategy by European
Commission
Shale gas basins in Europe
Poland
• Most active country
• Players like Chevron, Exxon
and Marathon present
• A lot of locals
• None has produced any
success
– Insufficient geological
expertise
– Inconsistent GR strategy
Ukraine
• Two separate basins
• Eastern is more
promising and was
focus for Shell
– War disrupted
exploration drilling
in the area
• Government is ready
to give full support
for newcomers
Romania and Bulgaria
• Romania – old oil producing
region
• Shale gas prospects are spread
between two countries
• Bulgaria hopes to have South
Stream pipeline and
suspended shale gas, but is
under pressure from EC
– Prime-minister just resigned,
more pro-Western
government is being set up
• Romania is generally Chevron
domain, but its exploration
activities met with ecologists
protests
Recent developments
War in Ukraine is disruptive for major gas pipelines from Russia to EU
(2/3 of total supply)
Russia has cancelled his new pipeline – South Stream – to bypass Ukraine thru
Bulgaria, EC is in search for new sources
Russia’s is actively using natural gas supplies as its political weapon and leverage
on Germany and other European nations
To prevent developing alternative energy sources Russia’s Gazprom and government
agencies are financing ecological and political groups in EU and US
First attempts by international oil and gas players
(Chevron – Poland, Romania, Bulgaria; Shell – Ukraine) to enter Europe
were not fully successful and met civil groups and political resistance
Europe’s dependence on
Russian gas
Limits to success
• Major oil companies:
– Lack geological expertise for unconventional gas
properties
– Enjoy too much of attention from local
governments and miss necessity for in-depth PR
and GR efforts in selected countries
• Independent oil companies:
– Have limited international experience
– Under pressure from their shareholders who tell
them to focus on their core domestic properties
and don’t take any new risks
Key for success in Europe
To be successful in Europe one has to implement a thoughtful
GR and PR strategy:
1. Secure majority at national parliaments and governments
at Eastern Europe in favor to shale gas production
2. Prepare public opinion that shale gas is an important issue
to the national security and economic prosperity of
involved countries
3. Ensure tax and other incentives at the EC level to support
E&P activities in Eastern Europe and apply pressure on
behalf of Western European nations towards their Eastern
counterparts to start activities
Solution: Shale Gas Consortium
SGC will be the organizer of gas properties development
in Eastern Europe:
• Secure the acreage together with industry
professionals
• Do the matchmaking for local investors and US oil &
gas companies
• Raise money for E&P activities
• Implement adequate PR strategy
• Lobby unconventional gas industry interests on
national and EC level
Formation of SGC
•
SGC is a Delaware-based Operations Company
– SGC recruits local specialists and organize initial market
entry, PR and GR efforts, as well as fundraising activities
•
For each property SGC will set up a local SPV with
participation of investors and oil & gas operator company
– SGC will hold 20% interest in the SPV, the rest will be divided
proportionally between the investors
– SPV will be financed in three stages:
• First stage – to obtain the license
• Second stage – to finance exploration
• Third stage – to finance production
•
Thus, SGC will finance initial entry risks and retain 20%
interest of potential upside
SGC Legal structure
Partners and Investors
80%
20%
100% SGC Poland
SGC Poland
Field1 (Cyprus)
Field1 (Poland)
SGC Poland
SGC Poland
Field2 (Cyprus) 100% Field2 (Poland)
SGC (DE)
20%
SGC Ukraine
SGC Ukraine
Field1 (Cyprus) 100% Field1 (Ukraine)
80%
Partners and Investors
SGC value proposition
• SGC for its oil & gas partners:
– takes away significant portion of investment risks
at the initial stage
– outsource non-core business activities like GR
and PR to the top-notch SGC’s GR team
• SGC for its investors:
– Leverages on geological competence of selected
partners to enter promising EE gas market
– Significantly decreases amount of investment
required to enter rapidly growing energy business
in Europe
SGC team
• SGC is supported and endorsed by reputable
US foreign relation and energy professionals:
Secr. Spencer Abraham, Hon. Dave McCurdy,
Amb. Thomas Pickering, Hon. Ed Verona
• SGC has a dynamic and young entrepreneurial
founders team: Hon. Ilya Ponomarev, Zachary
Todd, Saumitra Thakur
• SGC relies on first class specialists on the
ground: Stanislav Belkovsky (PR), Ariel Cohen
(GR), Thomas Gallagher (IR)
Why now
Falling oil prices make European market even more attractive
as before compared to United States. It is time to diversify
The strategy to diversify energy sources at the EU level is
being designed right now; new team at EC is being put in
place after recent EU elections
Political leadership in Poland and Ukraine is being changed
Anger against Russia and desire to cut the connecting ties are
at all times high
Local investors are looking for new opportunities in energy
sector as well