Shtokman Hits the Shelf

Gazprom has announced that that it is shelving its premier development project.

Vsevolod Cherepanov, head of Gazprom’s production department ,said that escalating costs and present market conditions made the development of the Shtokman gasfield in the Arctic unfeasible for Gazprom and its partners Total SA and Statoil ASA.

“All parties have come to the conclusion that financing is too high to be able to do it for the time being,” said Cherepanov.“We are collecting new data. We have extensive gas resources. We shouldn’t take hasty decisions.”

The project has suffered from a series of delays, the latest announced this past June.

Located 550 km (340 miles) offshore in the Arctic Barents Sea, the Shtokman gas field is one of the world's largest with gas reserves of almost 4 trillion cubic metres.

The partners envisioned that Shtokman would begin pipeline deliveries to Europe via the Nord Stream pipeline in 2016 and liquefied natural gas (LNG) deliveries  from 2017.

Statoil spokesperson Jannik Lindbaek told Reuters said the partners are still in talks over the project's future.

"We have a direct dialogue with Gazprom and still believe that it should be possible to implement this project, but anumber of factors needs to fall into place," said Lindbaek. "There are huge resources and interesting opportunities on Shtokman, but it requires an agreement on the commercial andtechnical aspects. This is what we are working on now."

Cherepanov said that a final investment decision on the first phase of the project would now not come before 2014.

Gazprom has a 51 percent stake in the group, Total has 25 percent and Statoil has 24 percent. Earlier this month, Statoil said it was stepping back from its stake and writing off $336m of investment.

For a full series of article on the Shtokman project, click HERE