Uchenna Izundu
International Editor
LONDON, Oct. 26 -- StatoilHydro will help OAO Gazprom develop the massive 3.7 trillion cu m Shtokman gas field in the Russian sector of the Barents Sea under a framework agreement signed Oct. 25. It has emerged as the second foreign partner that Gazprom has picked to initially produce 23.7 billion cu m/year of Shtokman gas for Europe as pipeline gas and LNG exports to other markets from 2013 and 2014 respectively.
StatoilHydro has taken a 24% equity stake in Shtokman Development Co. (SDC) and will join other shareholders Gazprom (51%) and Total (25%) to carry out the first phase of development.
SDC will plan, finance, and construct infrastructure for Shtokman with StatoilHydro bringing its expertise in technology, industrial experience, and large offshore developments to the table. The partners will take their final investment decision in the second half of 2009. Developing Shtokman, which also contains 31 million tonnes of gas condensate, is estimated to cost at least $20 billion.
"The project planning phase aims at establishing an acceptable technical and commercial basis for the final investment decision, which is expected to take place in the second half of 2009. Until the final investment decision is made, StatoilHydro's exposure is limited to the company's share of the cost of planning and studies," StatoilHydro said. SDC will own the infrastructure for 25 years once production starts.
However, it remains unclear how StatoilHydro will make returns on the project and what its exact role would be. Derek Butter, head of corporate analysis at Wood Mackenzie Ltd., said that although the agreement was a "major coup", it was likely to be similar in nature to the agreement that Total has previously signed with Gazprom. "Total has said that they will be able to book reserves and production. Otherwise, it sounds like StatoilHydro will build infrastructure and hand it back to Gazprom; we need to see the details."
Professor Jonathan Stern, Director of Gas Studies at the Oxford Energy Institute, told OGJ that it was unclear how StatoilHydro's participation in Shtokman would translate into sales as only Gazprom has the monopoly to export gas from Russia. "The first phase of gas will go into the North European Gas Pipeline," he added.
Butter said: "It is possible that StatoilHydro could get LNG marketing rights but unlikely that Gazprom would allow them to sell gas into Europe as they are competitors."
Welcoming StatoilHydro into the consortium is a change in attitude for Gazprom, which said last year that it would solely develop Shtokman despite a year-long bidding process from the majors to assist the company and gain access to the resources (OGJ, Oct. 16, 2006). Those originally in the running were ConocoPhillips, Total SA, Chevron Corp., Statoil ASA, and Norsk Hydro Oil & Energy. Analysts added that it was unsurprising that a formal agreement had been reached as both had been separately vying for the project, but had been unable to progress until their merger was cleared.
Contact Uchenna Izundu at [email protected].
