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Shale Gas M&A On The Rise: KPMG

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[A KPMG International report on merger and acquisition activity (M&A) in US, Argentina and China reveals that Shale gas may prove to be a "game changer" for world energy markets. As compared to traditional fuels, shale gas has recently been touted as a low-cost, carbon-friendly alternative. Significant deposits of shale gas are being discovered throughout the world. The KPMG report mentioned the factors affecting M&A in the shale gas sector in US, Argentina, China with  large known recoverable reserves—each at quite different stages in developing their shale gas industries. According to the poll, US is considered to be a maturing shale gas industry. It is seeing consolidation, repositioning and the entry of new domestic and foreign investors into the sector. Long-term pricing considerations are primarily driving current US M&A transactions, according to 46 percent of respondents to the KPMG Global Energy Institute survey. A large portion of US shale reserves have been discovered. As these reserves are depleted, US investment in domestic shale gas will peak and investors will look for replacement reserves. Most respondents (52 per cent) believe that US investments in shale gas will move cross-border in 5 to 10 years; 25 per cent believe this will happen even sooner. Argentina is on the cusp of large-scale production, and its local producers are looking for joint venture partners to help develop the industry's tremendous potential. The Argentine government actively promotes foreign investment in its shale gas industry and offers substantial government support. Analysts are optimistic that Argentina's shale gas industry is poised to emulate the success of the US shale gas industry. According to 76 percent of respondents, South America will become the destination of choice for companies investing in shale gas outside the US, trailed by the Asia Pacific (13 per cent) and Europe (9 per cent). Early indications suggest that the country is already drawing a larger share of shale gas investment.  This brings us to China. China's shale gas reserves are a dozen times greater than its conventional gas reserves and could be the world's largest. China's restrictions on foreign investment may hamper the shale gas development in the country. "In a world of rising energy prices, pressure to reduce harmful emissions and geopolitical instability, each of these countries has a huge stake in developing its shale gas production and distribution capabilities." Says Wayne Chodzicki, KPMG's global head of Oil and Gas. He also adds that "Given the abundance of shale gas reserves, investors have a world of choices as to where they invest next." KPMG is a global network of professional firms providing Audit, Tax and Advisory services. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative, a Swiss entity.