Gazprom's position as the world's largest natural gas supplier may be shattered as an ever larger number of companies are investing in alternative gas production, a Russian business paper reported on Wednesday.

Alternative sources of natural gas extraction such as coal-bed methane and shale gas have become popular lately as Russia, Qatar and Iran, which account for about half of global natural gas reserves, have been reluctant to admit foreign companies to their gas deposits, Vedomosti reported.

According to the estimate of the International Atomic Energy Agency (IAEA), global reserves of alternative gas make up about 1,000 trillion cubic meters, with shale gas accounting for about half of these reserves, whereas traditional natural gas deposits can yield five times less (177.4 trillion cubic meters in CIA estimates, 194 trillion cubic meters in Gazprom estimates and 213 trillion cubic meters according to BP data), Vedomosti said.

Many countries can boast large reserves of alternative gas, with up to 120 trillion cu m found in the United States, 100 billion cu m in Russia, 70 billion cu m in the Middle East, 36 billion cu m in China and 22 trillion cu m in Australia. Large reserves of alternative gas are also located in Canada, India, Germany, South Africa, Ukraine and Kazakhstan, the paper said.

Alternative gas projects enabled the United States to outperform Russia last year as the world's leader in gas production, with 745.3 billion cu m extracted compared with Russia's 582.9 billion cu m, the paper said.

Non-traditional sources accounted for only 10% of U.S. gas extraction in 1990 compared with the current 40%, and this figure can reach 60% by 2020, the paper said.

Further expansion of gas extraction will enable the United States to completely discontinue gas imports (currently 16% of consumption). Whereas three years ago, the United States discussed the possibility of buying liquefied natural gas abroad, including from Russia, such plans currently do not exist, the paper said.

Gazprom, which earlier planned to build a liquefied natural gas facility close to its huge Shtokman gas field in the Russian Arctic, has frozen the project for three years, the paper said.

The market is strongly volatile. Supply considerably exceeds demand, which can be attributed, among other things, to booming shale gas extraction in the United States, Shtokman Development Executive Director Yuri Komarov earlier said.

Meanwhile, Gazprom has already launched a pilot project in the Kuzbas coal basin for coal-bed methane extraction. The project aims annually to produce 4 billion cu m of gas, which is less than 1% of Gazprom's overall production but it is unclear when the energy giant will reach this capacity, the paper said.

At the same time, according to estimates of the IEA, Gazprom's operations will remain stable in the next ten years on the European market. The base scenario offered in World Energy Outlook 2009 suggests that Russian gas will account for about 33-34% of European demand compared with the current 25%, the paper said.

MOSCOW, March 10 (RIA Novosti)