Statoil Says It Is Still Seeking Solution to Shtokman

Norwegian major Statoil has said that it is still seeking a solution to its Shtokman problem despite handing back its shares in the project at the end of June.

In an update released by the company yesterday evening, after the news of its decision to relinquish its shares had broken in the media, Statoil said that certain technical and financial issues must be solved in order for it to make an investment. In particular, the company pointed to issues around the framework conditions, high investment costs and uncertain profitability of the project.

Statoil said that its decision to leave was motivated by the opinion that it was not possible to solve these issues under the current framework of the Shtokman Development AG but said it continued to seek solutions with operator Gazprom.

"We need a commercial concept to justify the large investment," Torgeir Kydland, Senior Vice President of Statoil, said. "We have a broad and strong portfolio of projects worldwide competing for investments, and Shtokman is competing on the same level as other projects."

The company also said that the market had changed significantly in recent years, particularly in regard to the abundance of gas found in the US in recent times, and the Shtokman project was competed in a very competitive marketplace.

However, the company still sees potential for its involvement in the project and says that future participation is possible.

"The Shtokman field consists of large proven natural gas resources, and field production is possible if we find the right solutions," Mr. Kydland said today. "We have made progress; for example we have found out that we can use the technology we have developed on the Snøhvit field to reduce costs. Russia has also taken steps towards preparing better framework conditions for offshore developments, but we still have some work ahead of us before we can sign any new agreement."

Statoil relinquished its 24 per cent stake in the Shtokman project on the 30th of June, when a deadline for a final investment decision expired without a positive result.

Gazprom, the operator of the project, holds a 51 per cent stake in the project. Total holds the remaining 25 per cent stake.