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Lithuania Scares Away Its Only Shale Gas Suitor


Lithuania’s big bet on shale gas to rid itself from the clutches of Russia’s Gazprom is looking more and more like a bust. The eastern European country is, like the rest of Europe, frustrated with high Russian gas prices and the long-term contracts Gazprom requires that tie the price of its gas to oil. As with its neighbor Poland, Lithuania has recoverable reserves of natural gas trapped in shale formations—an estimated 400 billion cubic feet’s worth. Last month the Lithuanian government awarded a contract to drill exploratory shale gas wells to Chevron, the only company that bid. The oil company, however, announced it is pulling out, citing Lithuania’s opaque regulatory environment. Reuters reports:

“Significant changes to the fiscal, legislative and regulatory climate in Lithuania have substantially impacted the operational and commercial basis of the investment decision since the company submitted its bid in January 2013,” [Chevron said in a statement].

Lithuania’s Prime Minister Algirdas Butkevicius said in a statement he regretted Chevron’s decision, but admitted there was a lack of regulatory clarity.

“The parliament still debates various amendments, which could affect the use of hydrocarbons in our country. That means, that first of all we need to have a legal framework in place,” he said in a statement.

Poland’s shale gas dreams are withering on the vine for similar reasons, and Mexico’s own shale hopes might never be realized if it doesn’t clearly delineate the ownership rights and tax levels for foreign oil companies.

Lithuania, Poland, and Mexico’s troubles define the contours of an all too often overlooked ingredient to the American success story: a comprehensible, consistent and, for the most part, transparent regulatory environment. Countries that lack this ingredient find it immensely difficult to attract foreign companies interested in taking on the high-risk/high-reward task of drilling for shale oil and gas.

[Oil rig image courtesy of Shutterstock]

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  • BobSykes

    If a woman has a right to an abortion, then she can have it done for any reason she likes. Bans on sex-selective abortions are absurd and cancel the basic right. If you don’t like sex-selective abortions, then you should oppose all abortions.

    By the way, most abortions in the US are performed on blacks and Hispanics, and there is an implicit design to limit black and Hispanic numbers. In the case of Margaret Sanger and the early Planned Parenthood, the design was explicit.

    So why don’t we restrict race-selective abortions.

    • Corlyss

      “By the way, most abortions in the US are performed on blacks and Hispanics, and there is an implicit design to limit black and Hispanic numbers.”

      What’s your evidence? According to the Guttmacher’s most recent data, the numbers are:

      • Non-Hispanic white women account for 36% of abortions, non-Hispanic black women for 30%, Hispanic women for 25% and women of other races for 9%.[6]
      And most of the white abortions are by middle class and upper class women. That’s why you occasionally hear people say “the wrong people are having abortions.” After all, more babies are a minority woman’s ticket to more welfare since 2006 when the Dems obliterated the welfare reforms instituted in 1996.

  • Corlyss

    Enquiring minds need look no further than the EU for Lithuania’s decision. The EU is rabidly opposed to fracking and shale gas production because it is heck bent on proving that fossil fuels are a dead end (even if it has to be achieved by policy rather than nature) and alternative fuels are THE only game within the EU’s borders.

  • GeraldWilhite

    I believe the United States is the only country in the world that allows ordinary citizens to own the mineral rights under their land. Perhaps that is one reason why the US has been so successful
    in increasing its energy supply through natural gas and oil coming from fracking and horizontal drilling.

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