SHALE oil production could boost the world economy by as much as $2.7 trillion by 2035, while reducing global oil prices by up to 40 per cent, according to a new report by PricewaterhouseCoopers (PwC).

The report said that the oil, extracted through hydraulic fracturing, or "fracking," could add as much as 3.7 percent to global growth, the equivalent of adding an economy about the size of the United Kingdom (UK) to the world, by 2035.

Experts in the oil and gas industry are of the view that Nigeria may lose its place in the international scene if drastic measures are not put in place to utilise the country's gas resources, in view of the growing demand for shale gas in the international markets.

Industry experts therefore urged Nigeria and other oil exporting countries to begin the process of diversifying their respective economies to face the challenge being posed by the shale oil production potential in the United States.

Meanwhile, the Nigerian National Petroleum Corporation (NNPC) has allayed fear of possible threat of shale oil production in some parts of the world to Nigeria's crude oil export.

NNPC believed that the country could always seek other markets for its crude oil if the United States refuses to import Nigerian crude oil due to their recent exploitation of Shale gas.

A report released by PwC recently, stated that the extra supply could reach up to 12 per cent of global oil production, or 14 million barrels a day, and push global oil prices down by up to 40 per cent, PricewaterhouseCoopers said.

Shale oil, unconventional oil, produced from oil shale by pyrolysis, hydrogenation or thermal dissolution. These processes convert kerogen into synthetic oil and gas, which can be used as a fuel or upgraded to meet refinery feedstock specifications.

The global impact of shale oil could revolutionise the world's energy markets over the next couple of decades, resulting in significantly lower oil prices, shifts in Gross Domestic Product, changing geopolitics and new business models for oil and gas companies, according to new analysis from PwC.

Chief Economist at PwC and co-author of the report, John Hawksworth, said: "Lower global oil prices due to increased shale oil supply could have a major impact on the future evolution of the world economy by allowing more output to be produced at the same cost. These effects could build up gradually as shale oil production rolls out across the world to produce an estimated rise in global GDP of around 2.3 per cent -3.7 per cent in 2035.

"This would be roughly equivalent to adding an economy the size of the UK to total global GDP in that year. The PwC analysis suggests that shale oil production has the potential to spread gradually from its current US base, increasing to almost 12 per cent of the world's total oil supply by 2035.

Given the relative insensitivity of oil demand to price changes, PwC scenario analysis suggests that oil price falls of as much as 40 per cent could be needed by 2035 to increase demand sufficiently to absorb this additional supply. However, the oil price fall could be restricted to around 25 per cent if Organisation of Petroleum Exporting Countries (OPEC) reduced its output in response to offset part of the rise in shale oil output.

The report stressed the need for governments in current net oil importing countries with potential shale oil resources to understand the likely economic payback from creating policies to encourage exploitation of shale oil, balancing these against alternative local and national environmental objectives.

It stated: "Governments in countries reliant on conventional oil exports will need to adjust to lower revenue flows in the long run and/or develop their own unconventional resources, including shale oil and gas. Shale oil (together with shale gas) could influence the dynamics of geopolitics as it increases energy independence for countries such as the US and China and reduces the influence of OPEC.