Fracking in Scotland Could Slow Rising Nat Gas Prices in Europe

With natural gas prices in Europe more than double costs in the U.S., Ineos Group AG has a novel solution: start fracking.

The world’s fourth-biggest petrochemical manufacturer bought a license last month to look for fuel around its refinery in Grangemouth, Scotland. That complements a deal by Ineos to import gas from the U.S., a step followed by other chemical companies in Europe such as Borealis AG and Saudi Basic Industries Corp. (SABIC) Scotland will next week vote on whether to stay in the U.K.

Producers of everything from fertilizers to plastics are looking for new energy sources at a time when options are limited. Shale exploration has helped boost supply and depress prices in the U.S. In Europe, the U.K. and Poland have embraced fracking — blasting water, sand and chemicals to harvest fuel embedded deep underground — while most of the rest of the continent, citing environmental harm, has not. The challenge has become urgent given the European Union’s dependence on Russia for 30 percent of its supplies, much via pipelines in Ukraine.

“If Europe doesn’t develop indigenous shale, then it will not have an energy-intensive industry in the next 20 years,” Tom Crotty, an Ineos director, said in an interview in London. “It’s that black and white. We will kill the industry.”

via Bloomberg

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza