Eni Looks to America for Import and Prices

CEO of Italian Eni, Paolo Scaroni, has said that global gas prices may be influenced by the United States in the future, as shale gas continues to be a major resource in the country.

Delivering the keynote speech at the IHS CERAWeek conference in Houston yesterday, Mr. Scaroni said that currently future gas prices had become incredibly difficult to predict, making his role and that of others like him "much harder".

"And the reason is that the future of the gas market, to paraphrase Winston Churchill, is a riddle, wrapped in a mystery, inside an enigma," he said. "And finding the key is not just an intellectual exercise. It is an essential part of the job of oil and gas companies."

He said that the lack of a single gas price in the market made "no sense" and varied massively in different markets. He said he could see this variety evening out in the future but did not know exactly when or at what level.

"The gap between oil and gas prices must shrink, either through an increase in gas prices or a drop in oil prices," he said. "The US gas prices equal to less than 3 million BTU dollars; this translates to a price below 20 dollars per oil barrel equivalent to gas and this means that at equal levels of heating power gas is traded at a sixth of the cost of WTI (West Texas Intermediate--a crude oil pricing benchmark), over half as much as in 2008."

If American citizens could get over their discomfort about shale gas, it could become a major exporter of shale to other markets in the future. Even if those citizens could get past this discomfort, he said, it remained to be seen whether they would accept higher domestic prices to bolster the bank accounts of a few businesses.

"The US has become an island in gas terms and has ensured self sufficiency for decades to come," he said. "But with recoverable gas resources of  50-60 trillion cubic meters, and stronger gas markets across the ocean, there are many who think that the US could become a major exporter over the next decade. But this is a more complex issue than it sounds."