Shtokman project – a key to industrial development of Northern European Russia. Speech by Alexey Miller at the International Economic Forum in Murmansk
Release
(October 15–17, 2009, Murmansk, Russia)
Dear ladies and gentlemen! Colleagues!
The project for the Shtokman gas and condensate field development, being implemented in the Murmansk Oblast, is not only a largest project of Gazprom, but a strategic one on the national level.
Many of those present here may know that the Shtokman gas and condensate field is situated in the central part of Russia’s offshore sector of the Barents Sea, 600 kilometers away from Murmansk to the northeast. Water depth varies from 320 to 340 meters here.
Shtokman is a unique field with the reserves accounting for 3.8 trillion cubic meters of gas and around 31 million tons of gas condensate.
With due regard to the amount of reserves, the Shtokman field will be developed in three phases. Over 70 billion cubic meters of natural gas and 0.6 million tons of gas condensate will be recovered annually during the plateau production period. Within Phase I 23.7 billion cubic meters of gas will be produced per year.
Phase I of the Shtokman project is executed by Shtokman Development AG, an engineering company set up jointly by Gazprom (51 per cent), France’s Total (25 per cent) and Norway’s StatoilHydro (24 per cent).
So far, Phase I development, including the project schedule, is currently being prepared for the final investment decision, which is to be taken in the first half of 2010.
In the near future, basic engineering will be accomplished, tender proposals will be received from contractors, key project contracts will be signed, expert reviews and construction permissions will be obtained.
The strategic significance of the Shtokman project is conditioned by its vast resources. Shtokman has been identified as a resource base for gas supplies to Western Europe via the Nord Stream gas pipeline, as well as for Russian liquefied natural gas production and its sales by Gazprom on the markets fully or partially inaccessible for conventional pipeline gas.
It is for sure that bringing onstream an LNG plant at the Shtokman field will substantially reinforce Gazprom’s stand as a global gas market player.
The technological uniqueness of the Shtokman project, its scale and the necessity to distribute the project risks – all these factors brought about the need to integrate organizational, financial and engineering capabilities of the world’s largest oil and gas companies.
The partners were attracted on the basis of a business model providing that the Gazprom Group retains the subsurface license and the title to hydrocarbons.
That is, Gazprom is a 100 per cent subsurface user. In addition, the Company fully controls marketing of the final product.
In order to create the infrastructure for natural gas production, transportation and liquefaction, a joint venture was established with Gazprom as the majority shareholder. The foreign companies, Total and StatoilHydro, supply the joint venture with up-to-date technologies for offshore fields development and LNG production, as well as share the financing obligations and project risks. The foreign partners participate in Phase I only. We will cooperate for a period of 25 years starting from the date when the project is put on stream.
Thus, within Phase I of the Shtokman field development, an innovative model is being formed for attracting largest international oil and gas companies to Russian subsurface resources development. The model meets Russia’s national interests and may be applied to other offshore projects.
The offshore, coastal and onshore survey program is nearly completed. The main technological solutions have been selected.
The submerged section provides for:
- construction of a submerged production complex;
- a floating production platform that allows for fast disconnection and is capable of evading icebergs;
- a trunkline for hydrocarbons transportation to the LNG plant.
Among the basic onshore infrastructure facilities are:
- product import facilities;
- gas treatment units;
- an LNG plant in the settlement of Teriberka with the first string capacity of 7.5 million tons per annum;
- a sea port for LNG carriers loading.
I would like to emphasize that the most important principle of Gazprom’s activities is strict compliance with both Russian and international environmental standards.
As part of the Shtokman project we will maximally reduce impacts on the vulnerable regional environment.
The Company has carried out a wide scope of environmental studies. Environmental research in the area of the field and along the pipeline route has been completed, as well as the bulk of research in the offshore area and on coastal facilities.
The Shtokman field will lay the basis for further development of Russia’s Arctic shelf.
As part of the project, a unique expertise will be gained in introducing state-of-the-art high-tech solutions for the LNG plant construction in permafrost conditions, and in developing the remote deep-water areas of the Arctic shelf.
The Shtokman field development will have a significant socio-economic effect securing the innovative advancement of the Russian industry, placement of large orders with Russian companies for manufacturing of equipment and rendering of services. It will also boost infrastructure growth within the port complex and help develop drilling bases and construction activities.
I’d like to pay special attention to the fact that the companies and enterprises of the Murmansk Oblast take part in the Shtokman project. We believe, Murmansk is meant to become the basic foothold for Russia’s Arctic shelf development and deployment of advanced productions. Both Gazprom and Shtokman Development AG have engaged themselves into close cooperation with the Murmansk Oblast Administration and with the regional Association of Suppliers. The Shtokman project will undoubtedly create a stable sales market for the regional companies both at the construction and operation stages.
The project execution will give a powerful impetus to the employment growth in the Murmansk Oblast, larger tax proceeds and other budget revenues, as well as to the implementation of local social programs.
During the construction period more than 10 thousand workplaces will be created to be primarily occupied by the Murmansk Oblast citizens. Shaping of the gas industry will stimulate the related industries, such as construction, transportation and services.
Great significance will be attached to the construction of the Teriberka – Volkhov gas pipeline stretching over 1,300 kilometers.
Linking together the Shtokman field and the Unified Gas Supply System, this gas pipeline will make it possible to execute the socially significant program for the Murmansk Oblast and Karelia gasification. The gasification will also step up the region’s industrial advancement.
Nowadays, Shtokman Development AG is actively attracting Russian suppliers and contractors to do the survey, research and engineering. For instance Rubin, Morneftegazproject and Petrotechnip are taking part in the project execution.
In our activities we proceed from the principle that technical solutions at the design stage should and will be optimized so as to maximize the Russian content in the project.
In conclusion, I would like to stress again that development of the continental shelf will help move over to a new level of Northern European Russia’s social and industrial advancement.
At the same time, successful execution of such large-scale projects as Shtokman will raise the energy security both in Europe and globally.