Gazprom Delays Startup of Shtokman to 2016

Shtokman Field
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Shtokman JV Partners
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MOSCOW (Dow Jones), Feb. 5, 2010

A consortium led by Russian gas producer OAO Gazprom said Friday it has decided to delay startup of the huge Arctic gas condensate development Shtokman by three years to 2016, amid uncertainty about global demand for gas.

The project will start deliveries of gas by pipeline to Europe in 2016, while production of liquefied natural gas, or LNG, will start in 2017, the Shtokman Development AG consortium said following a board meeting. An original plan envisioned deliveries of pipeline gas 2013 and LNG by 2014.

A final investment decision for pipeline gas will be taken in March 2011 and for LNG by the end of 2011.

The Shtokman offshore field -- a joint project with France's Total SA and Norway's Statoil ASA --is a technically challenging project located in icy waters in the Barents Sea around 500 kilometers north of Murmansk.

Many industry experts had questioned Gazprom's financial and technical ability to realize such a project on time amid a recession. Despite widespread skepticism that Gazprom would bring Shtokman onstream on time, the company has insisted the development remains top priority and wouldn't be affected.

Last summer, Gazprom postponed the launch of Bovanenkovo, a huge field in the northern Yamal Peninsula, by a year to 2012.

Demand for Russian gas in Europe -- Gazprom's key export market -- plummeted last year due to the recession. At the same time new supplies of LNG and shale gas swamped the market, sending spot prices lower.

Gazprom holds 51% in the joint venture, with Total and Statoil holding 25% and 24%, respectively.

Copyright (c) 2010 Dow Jones & Company, Inc.

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