Gazprom Delaying Development Of Shtokman Gas Field

October 2012, Vol. 239 No. 10

Development of the vast Shtokman gas field are on hold indefinitely until a more cost-effective plan can be worked out, Gazprom said. The firm agreed with partners Total and Statoil that the project was unfeasible at current costs. No new decision will be made until 2014.

This is the latest setback to the Arctic extraction project which was first announced in 2008. It was expected pipeline exports would start in 2013 and shipment of LNG in 2014. By 2010, those dates were pushed back to 2016 and 2017, respectively, and that schedule was dependent on an investment decision being made in 2011.

The physical challenges of developing Shtokman, which lies about 550 km off shore in the Barents Sea, are vast and prohibitively expensive. It is believed to be one of the largest in the world with an estimated 3.8 Tcm of natural gas and 37 million tons of natural gas condensate. The costs of the first stage of the vast project, which will require rigs to drill far from land in treacherous seas, the laying of an undersea pipeline and the construction of a gas-liquefying plant near Murmansk, are estimated at as much as $15 billion.

Gazprom and Japan signed an accord to move forward with construction of a $13 billion natural gas terminal in the Russian Far East port city of Vladivostok. The ultimate deal hinges on reaching an agreement on the price Japan will pay for the natural gas. The planned Vladivostok plant would double Gazprom’s LNG export capacity.

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