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12 Feb, 2010 16:44

Coal to gas opens up as Gazprom goes unconventional

Russia has launched its first project to extract gas from coal. Gazprom is starting the project in West Siberia, where president Medevedev has met with the country's fuel producers to discuss Russia's energy future.

Unconventional gas – produced from coal or shale – is a major domestic energy supplement in the United States. Now Russia's Gazprom is ready to give it a try.

Industry players, such as Viktor Vekselberg are warning its growing popularity today could cause it to become conventional tomorrow.

“One of the reasons dramatically changing the picture of the global gas market is a sharp increase in the development of gas from so-called unconventional sources. The growth volumes of unconventional gas tripled in relation to traditional gas over the last three-four years. Projects targeted at liquefied natural gas supplies will now be shifted to other territories.”

The developer of Kovykta gas field says soon North America won't need Russian gas, and demand from Europe is also waning. Aleksandr Nazarov, Senior Analyst at IFC Metropol says Russia should look east.

“To hedge risks Russia needs to sign long term contracts with China.”

Gas producers say Russia's gas market should be de-monopolised. That would allow competing gas producers to provide the market with better prices, and make it harder for unconventional gas to rival conventional.