Shale Gas Revolution Poses Challenge for Shtokman Project

Jan Helge Skogen, Head of Statoil Russia, said the shale gas revolution in the US has had an enormous impact on the global gas and LNG industries and poses a challenge in a decision to proceed with the Shtokman project.

The Norwegian giant holds a 24% interest in Shtokman Development Company, the operating joint venture of the Barents Sea field, whose gas field’s account for approximately 3.9 trillion cubic metres of natural gas and more than 37 million tons of gas condensates.

Gazprom (51%) and Total (25%) are the other project partners, who will meet before the end of the year to make final investment decisions on the multibillion-dollar project.

Gas from the gas condensate field located 650 kilometers north of Murmansk will be piped to European consumers and shipped on tankers to global markets as liquefied natural gas.

The executive’s comments come as project partners await fiscal relief for the Shotkman project in the form of discounted rates of mineral extraction tax and gas export duty.

Last week a Finance Ministry official said the tax regime for the Shtokman gas field is unlikely to be decided on in time for a final investment decision. The State Duma adjourned for the Dec. 4 elections, meaning no considerations for possible changes to the tax regime applied to the multibillion-dollar project are possible this year.