* U.S. companies benefit from cheap shale gas - BDI
* German energy policy could cost $446.42 bln by 2030
* Asian industrials also worried by their high gas costs
By Henning Gloystein
LONDON, Nov 8 German industrials are concerned
they will lose a competitive edge against rivals in the United
States, where a boom in unconventional shale gas production has
led to a sharp drop in industrial energy costs, industry lobby
group BDI said.
German energy costs, by contrast, are rising as its
government has decided to exit nuclear power generation, invest
billions of euros into expanding the renewable generation sector
while largely relying on imports to meet its natural gas demand.
"There are some things that are beyond our control. At the
moment, we are not benefiting from the development in the United
States and I do not see that this will be the case in the
future," BDI's director general Markus Kerber told Reuters on
"In fact, I would rather expect the discrepancy in gas
prices to grow in the mid-term," he added.
Germany's economy, Europe's biggest, relies heavily on
energy intensive industries such as chemical production from
industry leaders such as BASF or Bayer or
the automobile sector.
Quoting industry experts, the BDI said the U.S. shale gas
boom could lead to a re-industrialisation of the United States
and warned this effect will not be replicated to the same extent
"Therefore European industrial companies will in all
probability have significantly higher electricity and gas prices
for the foreseeable future than U.S. companies," the BDI said.
U.S. wholesale natural gas prices currently costs around
$3.5 per million British thermal units (mmBtu), compared with $9
per mmBtu in Europe.
The lobby group said Germany's energy policy of abandoning
nuclear power generation and investing heavily in renewables,
which require government subsidies to operate profitably, would
cost Germany between 150 billion and 350 billion euros ($446.42
billion) by 2030.
Kerber said shale gas exports to Europe were not
economically viable yet, and therefore could not serve as a way
to lower energy costs on the continent.
"To lower prices, we need a pan-European regulation and
market design. The energy shift is a European project," he said.
The European Commission (EC) is also worried about high
energy costs, and hopes the creation of a pan-European energy
market will help bring prices down.
"We believe a functioning internal market will keep costs
down," Commission spokeswoman Marlene Holzner said.
The EC's deadline for a single energy market is 2014,
although it has said it is not expected to meet that.
"We have seen that the transition is very, very slow. That's
something that will be tackled," Holzner said.
ASIAN INDUSTRIALS ALSO WORRIED
Similar concerns are also being raised in Asia, where
industry makes up a large share of economic output in leading
economies such as Japan and South Korea, who are the world's
biggest importers of liquefied natural gas (LNG).
At $13.50 per mmBtu, Asian spot prices for LNG are even
higher than in Europe.
"Japanese policy-makers are increasingly worried about the
falling competitiveness of local industry due to an over
reliance on Asian LNG supplies with non-flexible, higher pricing
slopes," Jason Gammel, analyst at Australian bank Macquarie said
in a report.
Rising dependence on natural gas imports risks driving key
Asian economies such as Japan down in the global ranking of
In the first half of 2012, Japan bought 18.6 percent more
LNG compared to the previous year, but the cost of these
purchases rose 49.2 percent which was enough to drive Japan's
first trade deficit in 31 years.
The crisis at Japan's Fukushima nuclear power plant in March
last year and resulting idling of the country's nuclear power
plant fleet spurred soaring imports of substitute fuels like
LNG, causing a record 2.5 trillion yen ($31.30 billion) trade
deficit in the first half of 2012.
One hope for European and Asian industrials is that U.S. gas
prices may not stay low forever.
Deutsche Bank estimated U.S. LNG exports would
cost $9 to $10 per mmBtu between 2016 and 2018, similar to its
estimates for British NBP hub spot gas prices, Europe's
benchmark gas trading hub.