Czechs press pause on shale gas

By bne IntelliNews May 8, 2012

Tim Gosling in Prague -

The Czech environment ministry announced on May 7 that it is planning a two-year moratorium on shale gas exploration licenses until new legislation to oversee the process is put in place. The Czech Republic is the latest CEE country to press pause on such exploration in the face of large protests against the alleged environmental pollution from industry practices.

"Existing Czech legislation is not prepared for such technically complicated research like there is in the case of shale gas," the ministry said on its website, reports Reuters. During the moratorium, the ministry will look at preparing geological and mining legislation that is clear for exploration companies.

The move sees the Czech's apparently siding with the likes of Bulgaria and France, which have also blocked the search for shale whilst the effects of hydraulic fracturing, or "fracking" - a process in which water, sand and chemicals are injected into subterranean rock at high pressure in order to free the gas they hold - on water tables and other elements of the environment are assessed.

Opponents of shale gas production in Europe have consistently pointed to the dense population of the continent as a drawback for the segment, as opposed to the wide open spaces in the US, where shale gas has proved a game changer for the global gas industry.

Such environmental concern has seen protests in many countries as they have moved to start exploiting reserves. In April, following local rallies, Prague cancelled a provisional shale gas exploration license previously handed to Australian-based BasGas. Environment Minister Tomas Chalupa said that the government commission that issued it had made legal and procedural errors during the application process.

The company can reapply, but must "sufficiently take into account the basic public interest, which is the protection of waters, nature and the landscape," Chalupa said at the time. It now appears BasGas will have that second chance delayed for at least 24 months. Ultimate owner, Hutton Energy, told Reuters it may consider pulling out of the Czech Republic due to an uncertain regulatory landscape.

The group the Czechs look to be joining includes many countries with minimal shale gas deposits, making its exploration a big political headache for little gain. Romania also looks set to join, with new Premier Victor Ponta having already said that he will halt all shale gas exploration until studies concerning the impact of fracking on the environment are complete.

However, Poland - which is hardly known for its sensitivity to environmental concerns anyway - is pushing hard to develop recoverable reserves that have been variously estimated at 500bn cubic metres to 5 trillion. The prospect of providing itself energy security for decades, or even becoming a major exporter to the rest of Europe, has done wonders to help Warsaw overcome the political risk, and state-controlled companies are leading the charge - alongside US majors - with hundreds of exploration already licences issued.

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