Chevron's (CVX) plans of exploratory drilling for shale gas in Romania could be put on hold for 2012. Romania's new Prime Minister Victor Ponta said that he would be looking to pause shale exploration projects in the country until next year.

Shale exploration and the practice of hydraulic fracturing have evoked a mixed response in Europe, with countries like France banning the fracturing process, while governments in places like Poland have looked to encourage the industry to cut dependence on Russian gas imports.

Chevron has actively pursued opportunities to export its expertise in shale exploration to the European markets, where natural gas prices are at a significant premium to gas prices in North America.

Romanian debate

Romania's new premier Victor Ponta is backed by a coalition of Social Democrats and Liberals. The government will look to win a full term in office in elections to be held toward the end of 2012. The Prime Minister has expressed his inclination to move ahead with shale exploration in the country only after a discussion over the environmental protection aspect of the issue.

The government has called for an immediate moratorium over shale extraction until the completion of a European study on the environmental impact of hydraulic fracturing. Licenses granted by the previous government to explorers such as Chevron drew protest in Romania and GreenPeace and a few other non-governmental organizations threatened to sue the government over the issue. The new government has said that it will look to balance environmental aspects as well as the country's need to develop additional energy resources.

Chevron holds licenses to explore more than 2.2 million acres of land in Romania for shale gas. The country has already witnessed public protests against the company's plans to begin exploration near a town called Barlad.

Chevron is proceeding cautiously with its shale exploration plans in Europe and has said that it may require three to five years to decide whether it would consider shale exploration outside the U.S. A large-scale shale exploration in Europe could have a major impact on natural gas production volumes of companies like Chevron.

We have a $109 price estimate for Chevron, which is at a 10% premium to its current market price.

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