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The Shtokman gas and condensate field development project is of strategic significance for Gazprom. The field will be the resource base for Russian gas exports to Europe via the Nord Stream gas pipeline currently under construction, with LNG technologies to be applied.
The Shtokman development process will involve using state-of-the-art technologies and technical know-how. Authoritative international companies will be invited for these purposes as contractors, with strict compliance with work deadlines and costs to be a critical contract clause.
The project management and foreign partner attraction for Phase 1 concept will be identified in spring 2007.
Sevmorneftegaz (a 100 per cent Gazprom subsidiary holding the license to search for, explore and produce gas and condensate in the Shtokman field) will act as an integrated engineering design and construction customer for Shtokman’s offshore installations including an upstream facility, pipeline system and LNG production compound.
Field Description
Discovered in 1988, the Shtokman gas and condensate field is located in the central part of the Barents Sea, about 600 km north-east of the city of Murmansk, with local sea depths varying from 320 to 340 m.
Shtokman’s explored reserves are valued at not less than 3.8 tcm of gas and around 37 mln t of gas condensate.
Project Viability Assessment
The following prerequisites speak in favor of successful execution of the Shtokman project:
Project Specifications
The Shtokman project contemplates annually extracting some 70 bcm of natural gas and 0.6 mln t of gas condensate. This is commensurate with annual gas production in Norway that is a large gas supplier to Europe.
An initial project stage is projected to see annual production of 22.5 bcm of natural gas and 205,000 t of gas condensate.
In September 2006, Gazprom successfully completed drilling of appraisal well №7 in the field. A preliminary analysis of the results enables to anticipate a further increase in Shtokman’s production potential.
Cooperation within the Project
In 2004-05 Gazprom signed nine memoranda with prominent energy companies that had provided their technical & commercial offers for joint projects to develop the Shtokman field, construct a gas liquefaction plant and supply LNG to the US market. After scrutinizing those offers, Gazprom announced on September 16, 2005 a short-list of companies eligible for detailed commercial talks about the Shtokman project. The short-list comprised Statoil (Norway), Total (France), Chevron (USA), Hydro (Norway) and ConocoPhillips (USA).
About a year Gazprom has been studying the possibility of granting international companies a 49 per cent stake in the Shtokman project. International companies however failed to provide assets corresponding by size and quality with Shtokman’s reserves. To that end, on October 9, 2006, the Gazprom Management Committee decided that Gazprom would develop Shtokman on its own, without foreign partners.
Strong assistance to the project execution is scheduled to be received from the Murmansk Oblast Administration and RF Navy based on the Cooperation Agreements with Gazprom dated November 2005. About 20 Russian companies are planned to be invited as contractors for constructing port berths, engineering pipelines and giving environmental impact assessments. Historians and archeologists will be invited for performing cultural and historical expertise of the territories concerned.
October 2006 saw successful finalization of the year-long public hearings surrounding the project in the Murmansk and Leningrad Oblasts, and Republic of Karelia.
Ecology
On October 23, 2006, the Federal Nature Management Supervision Service (Rosprirodnadzor) granted the state ecological expertise approval for the Investment Rationale for Phase 1 of the Shtokman field development embracing liquefied gas production and sea-borne transportation.