Total to partner with Gazprom for Shtokman's first phase

Russia's Gazprom and France's Total have signed a framework agreement for the joint development of the first phase of the giant Shtokman gas-condensate field in the central part of the Barents Sea.

July 13, 2007

By OGJ editors
HOUSTON, July 13 -- Russia's OAO Gazprom and France's Total SA have signed a framework agreement for the joint development of the first phase of the giant Shtokman gas-condensate field in the central part of the Barents Sea off Russia.

Shtokman field reserves are estimated at 3.7 trillion cu m of gas and more than 31 million tons of condensate.

The companies will establish a special purpose vehicle to organize the design, financing, construction, and operation of the infrastructure of the delelopment's first phase, which will produce 23.7 billion cu m/year of gas. The SPV will own this infrastructure for 25 years from field commissioning.

Gazprom will hold a 75% participating interest in the vehicle and Total will have 25%. Upon completion of phase one operations, Total will transfer its share to Gazprom. The agreement also provides for the possibility for other foreign partners to join the project up to a 24% participating interest at the expense of Gazprom's share.

Deliveries of pipeline gas are expected to start in 2013. First LNG will be delivered in 2014.