RUSSIAN NATURAL GAS: SHTOKMAN FIELD

July 13, 2007 at 10:44 pm | Posted in Earth, Globalization, Oil & Gas, Russia | Leave a comment

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Shtokman field

The Shtokman field (Russian, also Stockman field), one of the world’s largest natural gas fields, lies in the Russian portion of the Barents Sea, 600 km north of Kola Peninsula. Its reserves are estimated at 3.2 to 3.7 trillion m³ of gas and more than 31 million tons of gas condensate. This is twice as much as the entire gas reserves of Canada and enough to supply the total gas demand of the European Union for seven years.[1]

Natural gas reserves were discovered in 1988, but the field was not developed owing to extreme arctic conditions and the depth of the sea. The sea depth in the area varies from 320 to 340 m.[2]

Project company

The license on the Shtokman field is owned by Gazprom and it will be developed through its subsidiary Sevmorneftegaz.[3][4] Sevmorneftegaz will act as an integrated engineering design and construction customer for Shtokman’s installations including an upstream facility, pipeline system and LNG production compound.[2]

In September 2005, Gazprom selected five companies – Statoil and Norsk Hydro from Norway, Total from France and Chevron Corporation and ConocoPhillips from the US – as finalists in a search for partners to develop the field, but in October 2006 decided to reject all potential partners.[5][6] Gazprom chief executive Alexei Miller announced that Gazprom will develop the field by itself but would consider foreign companies to work as subcontractors. The reason for the rejection of the bid was that “…the foreign companies could not offer assets that compare to the volume and quality of Shtokman’s reserves.”[6] In April 2007, Nicolai Bichuk, head of the Committee for Natural Resource Management in Russia’s Murmansk Oblast, softened Alexei Miller’s earlier statement when he told a Thompson Financial reporter that there is “certainly a possibility, especially for Norwegian companies” to take a stake in Shtokman.[7] In April 2007, Chevron announced giving up its plans to join the development of the Shtokman project.[8]

According to the Russian media Gazprom is considering now giving foreign companies a minority stake in Sevmorneftegaz, instead of allowing direct ownership stakes in the Shtokman field.[9]

On 12 July 2007, Gazprom announced that Total would be partners on the project with a stake of 25% in Sevmorneftegaz. The deal was signed on 13 July 2007 in Moscow.[10] it is expected that foreign companies will be able to take another 24% of the stake. This will leave Gazprom with 51% in Sevmorneftegaz and 100% of the project license.[11][12]

Development

At the initial stage the project is expected to produce 22.5 bcm of natural gas and 205,000 tons of gas condensate annually. Later the production is expected to increase up to 70 bcm of natural gas and 0.6 million tons of gas condensate.[2] All extraction facilities will be probably located under water. The development costs are estimated at $15 billion to $20 billion.

Originally it was planned to ship Shtokman’s gas to the United States as liquid natural gas (LNG). Later it was indicated by Gazprom that the majority of produced natural gas would be sold to Europe via the planned Nord Stream pipeline.[13][14] For this purpose, the pipeline from the Shtokman field to the Murmansk Oblast and further via Kola peninsula to Volkhov in the Leningrad Oblast will be built.[15] The project of LNG production is delayed until 2014 and the LNG plant will be laid most likely in Vidyaevo, Murmansk Oblast.[13][15][16]

In September 2006, Gazprom completed drilling of appraisal well No. 7 in the field, and expects the gas production to be running by 2013-2015.[2][16] However, Norwegian environmental group Bellona believes that Shtokman field will probably not be on stream before 2035 because they claim Gazprom lacks the expertise to develop the field by themselves.[17] Also Russian scientists have warned that the Shtokman’s development will face greater problems as global warming unleashes vast icebergs into the Arctic.[18]

External links

Notes

  1. French Oil Giant Agrees to Work on a Russian Natural Gas Project. The New York Times (2007-07-13). Retrieved on 2007-07-13. a b c d Shtokman project, Gazprom
  2. Gazprom paid 1,7 billion USD for control in the Barents Sea, Baretnsinfo 8 August
  3. 2005

  4. Gazprom Sub and Hydro Begin Drilling Shtokman Field Well, OilVoice 25 July 2006
  5. Gazprom Decides on Short-list of Companies – Poptential Partners in Shtokman Gas Condensate Field Development, Gazprom 16 September 2005 a b Gazprom Rejects Foreign Partners for Shtokman, Rigzone 9 October 2006
  6. McLoughlin, P. Statoil well placed to take equity stake in Shtokman – top Russian official, Forbes, April 13, 2007
  7. Chevron decides against joining Gazprom-led Shtokman gas project, RIA Novosti 4 April 2007
  8. Gazprom may offer Shtokman alternative, Upstream 19 March 2007
  9. Total signs on Shtokman dotted line. Upstream online (2007-07-13). Retrieved on 2007-07-13.
  10. Gazprom chooses French Total as partner for initial phase of Shtokman field development. Press release. Gazprom (2007-07-12). Retrieved on 2007-07-12.
  11. The Kremlin-controlled gas monopoly has chosen France’s Total as its partner in the giant Shtokman gas field. The Times online (2007-07-12). Retrieved on 2007-07-12. a b Russia prepares for LNG export from Murmansk, Barents Observer 14 December 2005
  12. Jorn Madslien. Shock as Russia goes solo on gas field, BBC News 9 October 2006
  13. a b Scientists oppose projected Shtokman pipeline, Barents Observer 13 September 2006
  14. a b Greg Walters. Shtokman Pipeline Gas to Start 2013, LNG in 2014, Dow Jones Newswires 4 April 2007
  15. Shtokman won’t be on stream until 2035, Upstream 17 April 2007
  16. ‘Iceberg threat’ looms over Shtokman, Upstream 27 April 2007

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