Germany’s fracking ban makes no difference

Fracking won’t do much for Germany. That’s the view of credit agency Fitch Ratings, which has looked at what the lifting of the current fracking ban might do for German […]

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By Sumit Bose

Fracking won’t do much for Germany.

That’s the view of credit agency Fitch Ratings, which has looked at what the lifting of the current fracking ban might do for German gas production.

Berlin is soon to make a decision on the future of fracking, which is at present banned. The country’s oil and gas industry want to lift the ban so that Germany, which produces only 10% of its own gas, can become more self-sufficent.

But analysis by Fitch Ratings has shown shale is unlikely to make any difference. They found there are plenty of obstacles such as opposition to drilling and uncertainty about the levels of reserves.  Also they predict production costs may be high at a time when gas prices are low due to slack demand.

Fitch found globally wide scale shale production remains limited to USA and Canada, while China and Argentina have only small-scale operations.

Lithuania, Poland, Romania and Ukraine have had some investment in the past few years but major oil players have stopped exploration due to environmental opposition or failure to find financially viable volumes of gas.

The decline in gas prices in 2014 was a major factor in the halt to exploration said the ratings agency, particularly as costs proved higher in eastern Europe than in other regions.

At present Russia’s Gazprom meets about 35% of Germany’s total gas demand with most of the rest coming from the Netherlands and Norway.