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You are here: Home → News → 2010 → Is Shtokman divorcing from LNG?

Is Shtokman divorcing from LNG?

by andre — last modified Feb 25, 2010 12:30 PM
— filed under: , , , ,

Shtokman Development AG seems to be talking with different voices, fuelling the impression that it is divided over the future development of the Shtokman offshore field in the Russian Barentz Sea.

At the International Forum of Oil and Gas Associations held in the Russian city of Arkhangelsk on 16-17 Feb., the Executive Director of Shtokman Development, Yuri Komarov, stated that gas production was planned to start by the end of 2015, as the press service of Arkhangelsk regional government reported on 16 Feb. 

Komarov added that the final investment decision was planned to be taken in March 2011, which would allow to start the flow of pipeline gas by late 2015 and guarantee the start of LNG production in 2017. Only recently, during a meeting of Shtokman's Board of Directors on 5 Feb. in Zurich, it was announced that the production of pipeline gas would only start in 2016 (EEO no. 34).

Komarov further noted that Shtokman considers it important to maintain plans for LNG production since it will allow to service different markets, including Europe, if market conditions demand. Gazprom, which holds 51% in Shtokman Development, plans to spend $ 1.2-1.5 bln during 2011-2015, according to Komarov.

Gazprom's partners Total (25%) and StatoilHydro (24%) have not commented on their investment plans.

The aim of the Forum was to attract the attention of service contractors in the oil and gas industry from Norway, Finland, Netherlands, France, Italy and the UK to the Shtokman project. Costs of the Shtokman project, including the construction of an LNG plant, were estimated at $ 15 bln in 2007.

EEO Focus: There are many arguments against Shtokman's costly Arctic investment plans indicating that the project is not viable under current economic conditions. For Shtokman LNG production to be profitable, gas prices have to be higher than $ 270 per 1,000 CM. However, current prices on spot markets are around $ 150 per 1,000 CM. It is possible that the Shtokman field will eventually serve only as a resource base for pipeline gas.

 

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