Shtokman Consortium Mulls Project Continuation

The three partner companies in the Shtokman project will discuss today whether to continue with the project or not, Businessweek has reported.

The three partners, Gazprom, Total and Statoil have met in Moscow today to discuss the final investment decision (FID) on the project, a decision which has so far been delayed twice due to unresolved tax issues with the Russian government and previously due to gas pricing and technology issues.

Following the last postponement of the FID, the 1st of April was announced as the date for the decision to be made. However, with time counting down to that date and a tax decision from the Russian government still not made, sources close to both Businessweek and Interfax say that talk may turn to whether or not to pursue the project.

Last week, Russian Deputy Finance Minister Sergey Shatalov said that while the government understood the need for the tax breaks, a decision on those was proving to be difficult.

"We understand that some tax breaks are required, that it won't succeed without them, but the range of tax breaks, their parameters, are difficult to predict," he said.

He also said that the data supplied to the government from the partners had so far not satisfied its need for information enough to make a decision.

The meeting today of the Shtokman Development AG, the operator of the project made up of the three partners, will seek to determine whether the project remains viable or prudent.

Gazprom is the majority stakeholder in the Shtokman project, a massive gas field on the Arctic shelf with a 51 per cent stake. Statoil holds a 25 per cent stake while Total holds the remaining 24 per cent stake.