January 27, 2012 / 3:33 PM / 8 years ago

IEA wants strict G20 shale gas regulations-Birol

* Shale gas has the potential to change global energy supplies

* But large-scale European development not expected soon

By Dmitry Zhdannikov

Geneva, Jan 27 (Reuters) - The International Energy Agency (IEA) wants the G20 to impose stringent rules on the development of unconventional gas to address ecological concerns and allow the world to have real benefits from the shale gas revolution.

The IEA’s Chief Economist Fatih Birol told Reuters in Geneva on Friday that it plans to publish “golden rules for the golden age of gas” in May in which the agency will give regulatory recommendations for shale gas, and that it will hold a meeting on unconventional gas in Poland on March 7, inviting players from Russia, Australia, South Africa, Mexico, and other major gas producers.

“We will have a series of recommendations for governments, companies and regulators,” Birol said.

“From our point of view we will monitor it (implementation of recommendations) and we think it is a very good time for the G20 under the Mexican presidency to follow this up and take into consideration, as many of the G20 countries are major gas producers”.

Birol said that the IEA, which advises industrial countries on energy policy, aimed to look at best practices and what kind of regulation is needed to address concerns about the industry.

The development of shale gas extraction is a potential game-changer in world energy markets, offering the potential for ample supplies in markets that could otherwise tighten in coming years.

In the United States, where the technology is most widely used, it could flip the country from being a net importer of natural gas into a net exporter.

But shale gas extraction requires large amounts of water and chemicals, and environmental concerns have led some governments to ban its use or put moratoriums in place.


Birol said that the industry currently faced the problem of water and chemicals overuse, contaminating water and also causing additional gas emissions.

“The good news is that those problems can be addressed by best technologies and practices,” he said, and added that it was “very important to minimize water use.”

Birol said it was too early to say if any chemicals would be blacklisted and how the recommendations would cover areas such as pipeline access in European countries.

Europe’s gas pipelines are mostly owned by large suppliers, such as Russia’s Gazprom, who have no interest in allowing competitors of the shale gas industry to use their infrastructure.

In the United States, regulation guarantees gas producers free address to the country’s pipeline infrastructure.


Birol said that unconventional gas had the potential to change the global energy supply structure.

“The way nuclear energy changed the picture 40 years ago, we may see similar changes in the energy picture globally and in some countries due to unconventional gas ... It will have massive economic and geopolitical implications,” he said.

Despite this global potential, Birol said that it was unlikely that shale gas production would kick off in Europe in the near future.

“There is a lot of activity underway in Poland, however, I would be very surprised if in the next few years we see a substantial amount of unconventional gas coming out of Poland. Ukraine is another example,” he said, and added that he hoped Russia would participate in the dialog even though Polish shale gas production could threaten Russian the dominance of Europe’s energy markets. (Writing by Henning Gloystein in London; editing by Keiron Henderson)

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