Russians to Invest in U.S. Shale Plays


January 16, 2013
Former vice speaker of the State Duma, Mikhail Yuriyev, is forming Amshale Energy Capital Partners to invest in shale oil and gas production in the United States, a number of sources including Vedomosti and Bloomberg report. According to Yuriyev, Russia's uncompetitive market, higher taxes and cost of services make the U.S. a much more attractive place for investment, Bloomberg reports.

Yuriyev, together with Andrey Kunatbayev and one other unnamed Russian partner, are ready to invest $200 million into the fund, according to Vedomosti. American investors are expected to provide up to $1 billion of additional funding, with further potential investors coming from London, New York, and Hong Kong, Yuriyev explained.

Three years ago, Yuriyev and Kunatbayev also created Pesto Investments Group in the U.S. for production and refining of shale oil and gas. According to Yuriyev, investors have already provided Pesto with between $50-100 million for drilling at three gas fields in Texas, with reserves estimated at 200 billion cubic meters. Lafert, another company that is 50%-owned by Yuriyev and Kunatbayev, is currently building an industrial nitrogen-fertilizer plant in Louisiana.

A number of Russian experts are doubting the wisdom of Yuriyev's plans, however. Andrey Polishchuk of Raiffeisenbank told Vedomosti that investment in U.S. shale gas production will likely result in low profit margins, considering the current low prices for gas in the U.S. Instead, Polishchuk and Tatyana Mitrova of Skolkovo's Energy Center recommended investing in shale oil production to reap higher profits.

Amshale energy will invest as much as $2 billion in plays in Texas, Utah, North Dakota, and Montana, and is expected to begin active investment next year.

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