Shtokman
Strategy
The Shtokman gas and condensate field development project is of strategic significance for Gazprom. The field will become a resource base for Russian pipeline gas as well as liquefied natural gas (LNG) exports to the Atlantic Basin markets.
The Shtokman field will be the resource base for Russian gas exports to the Atlantic basin markets
Field Description
Shtokman gas and condensate field was discovered in 1988. This field is located in the central part of the Russian sector of the Barents Sea shelf, about 600 km northeast of the city of Murmansk at local sea depths varying from 320 to 340 m.
The field's C1+C2 reserves account for 3.8 tcm of gas and 53.3 mln t of gas condensate.
The Deepsea Delta semi-submersible drilling rig
Project Major Specifications
The Shtokman development project envisages annually producing some 70 bcm of natural gas and 0.6 mln t of gas condensate comparable to annual gas output of Norway, one of the largest European gas suppliers.
Phase one contemplates annually producing 23.7 bcm of natural gas with the startup of gas supply via the gas pipeline due 2013, and liquefied natural gas supply- 2014.
In September 2006 Gazprom successfully finished drilling of exploration well #7 in the Shtokman field
License Holder
Sevmorneftegaz (a 100 per cent subsidiary of Gazprom) holds the license to search for, explore, and produce gas and condensate from the Shtokman field.
Gazprom, Total and StatoilHydro are the partners for the Shtokman field development, phase on
Cooperation within the Project
On July 13, 2007 Gazprom and Total signed a Framework Agreement on the Main Conditions of cooperation at the first phase of the Shtokman gas condensate field development. On October 25, 2007 Gazprom and StatoilHydro signed an identical Agreement.
Strong assistance to the project execution is scheduled to be received from the Murmansk Oblast Administration and the Russian Federation Navy entities based on the Cooperation Agreements with Gazprom signed in November 2005.
October 2006 saw the successful completion of the year-long public hearings surrounding the project in the Murmansk and Leningrad Oblasts, and the Republic of Karelia.
Strong track record, enormous resources and state-of-the-art technologies of partner companies guarantee the success of this unique project
Special Purpose Company
On February 21, 2008 Gazprom, Total and StatoilHydro signed a Shareholder Agreement establishing Shtokman Development AG special purpose company. Gazprom owns 51 per cent, Total — 25 per cent and StatoilHydro — 24 per cent of the company's stock.
The Company will be the owner of the first phase infrastructure of the Shtokman gas condensate field for 25 years since its commissioning.
The relations between the special purpose company and Sevmorneftegaz will be based on a contract stipulating that Shtokman Development AG will bear all the financial, geological and technical risks associated with the extraction of gas and condensate as well as LNG production.
Gazprom retains 100 per cent of Sevmorneftegaz's stock and all rights to market an output.
Ecology
On October 23, 2006 the Federal Nature Management Supervision Service (Rosprirodnadzor) granted the approval of the state ecological expertise on the investment rationale for the first phase of Shtokman field development embracing liquefied gas production and sea-borne transportation.
Project Viability Assessment
The following prerequisites speak in favor of successful execution of the Shtokman field development project:
- large gas reserves secure sustainable long-term supply;
- an opportunity provided to diversify supplies through parallel pipeline and liquefied natural gas shipments to Europe and the USA varying directions as the market situation requires;
- an opportunity provided to considerably expand gas production depending on the market situation;
- favorable feedstock composition allows minimizing gas separation and treatment costs;
- low regional temperatures provide for reducing gas liquefaction energy-related costs;
- no transit countries along the natural gas delivery route from the Shtokman field to Germany boosts the project competitiveness;
- availability of a developed infrastructure on the Kola Peninsula creates a favorable environment for the project execution;
- relatively small distances between the field and end users (the US Eastern Coast, Canada, Mexico) will make Russian LNG competitive;
- absence of ices and permafrost — a favorable factor for the Shtokman field development versus other Arctic fields.