Gazprom Energy announced on Friday that it had decided to switch production at Russia’s vast Shtockman field to LNG. New target markets in Asia are also being proposed, showing a definite change of course from the project’s previously Europe-centric export plans.
The Shtockman field, located in the Barents Sea has estimated reserves sufficient to meet global LNG demand for an entire year. Russian President, Vladimir Putin referred to the field as being of “global significance.”
The project has faced repeated delays and massive costs; one estimate by Gazprom put the figure at US$ 30 billion – the figure is believed to have risen since. It is these rising costs that have most likely driven the project’s leaders, Gazprom, to appeal to the growing Asian energy markets. Economic uncertainty in Europe has suppressed energy prices in the short-term and raised serious concerns over the future of demand from the region.
The formal decision to finalise the proposed changes is due to take place at a meeting in St Petersburg in June. Gazprom’s chief, Alexei Miller, gave some detail to outcome of the changes when he said, “The balance between pipeline and liquefied gas is changing toward LNG. We are talking about 100% liquefaction except for gas intended to supply (the nearby) Murmanks region.”
One of the project’s main partners, The Norwegian firm Statoil has been reported to be considering withdrawing from the project because of increasing costs and its own lukewarm support for the change to LNG. There have been rumours that Shell would be willing to replace Statoil in the venture. Though he did not give a definitive answer, Miller did not deny the possibility of Shell becoming involved in Shtockman when he was asked if this was the case, “We are examining the possibility of new partners entering the project. We are already working on LNG with Shell in other projects.”
Similar rumours have circulated regarding Total’s share in the project, however, the company only recently released a statement claiming that it intended to maintain the entirety of its 25% stake in Shtockman.
Edited from various sources by David Bizley
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