Gazprom Seeks Approval for Yamal Field Development

Gazprom has sent plans to the government for the development program of a huge natural gas field on and offshore the remote Yamal peninsular in West Siberia. The Yamal project lies at the cornerstone of Russia's overall energy strategy which requires Gazprom to maintain natural gas production at a rate of 530 billion cubic meters per year until 2020.

Gazprom drew up the program including economic, operational and social aspects of the ambitious Yamal project, on the instruction of President Putin. If the plan is accepted development will begin at the Bovanenkovskoye and Kharasaveiskoye gas condensate fields at the foot of Yamal which stretches north into the Arctic waters of the Kara Sea.

Other highly prospective deposits on Yamal include the Novorportovskoye and Rostovtsevskoye oil field, the Kruzenshternovskoye gas condensate field and the Tambeyskaya group of deposits. Gazprom needs output from Yamal to compensate for an ongoing decline in output from three giant West Siberian deposits at Urengoi, Yamburg and Medvezhe.

However, development of the Yamal peninsular will be extremely expensive. The program submitted to the government defines both the gas price and tax levels that will be required if the project is to be economically viable. Yamal has been officially defined as "strategic gas production region", a label that should make it eligible for special tax breaks and even government subsidies.