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At Gazprom, Views Conflict on Viability of Barents Sea Gas Project | |
(about 5 hours later) | |
MOSCOW — Gazprom, the Russian energy company, has long presented the Shtokman field in the Barents Sea as the jewel in the crown of its natural gas reserves, a find that might hold enough gas to meet global demand for a year. | |
But Gazprom, a state-controlled company, has struggled for years to develop the field. This week, executives at Gazprom presented conflicting views of whether the project was even viable. | |
According to news agencies, Vsevolod Cherepanov, chief of Gazprom’s development department, said the Shtokman field now appeared uneconomical to develop. | According to news agencies, Vsevolod Cherepanov, chief of Gazprom’s development department, said the Shtokman field now appeared uneconomical to develop. |
Mr. Cherepanov, who was in Norway for a meeting with some of Gazprom’s partners in the project, said the latest engineering approach to tap the gas had failed. | Mr. Cherepanov, who was in Norway for a meeting with some of Gazprom’s partners in the project, said the latest engineering approach to tap the gas had failed. |
“All parties have come to the conclusion that the financing is too high to be able to do it for the time being,” Mr. Cherepanov said, according to Reuters. He said an investment decision on a new approach would be postponed until 2014. | “All parties have come to the conclusion that the financing is too high to be able to do it for the time being,” Mr. Cherepanov said, according to Reuters. He said an investment decision on a new approach would be postponed until 2014. |
Bloomberg News quoted Mr. Cherepanov as saying that “Phase 1 has been paused.” | |
But in Moscow, a Gazprom spokeswoman said Mr. Cherepanov’s comment had been misconstrued as suggesting that the company had abandoned Shtokman altogether. Gazprom, she said, had no intention of shelving the project indefinitely. | |
The spokeswoman said the company would issue a full clarification on Friday. | The spokeswoman said the company would issue a full clarification on Friday. |
Gazprom formed an alliance with Total of France and Statoil of Norway in 2007 to develop the Shtokman field. The companies planned to sell the fuel both through pipelines and as liquefied natural gas. | |
Shtokman’s vast reserves gave Gazprom the upper hand in negotiations with potential partners — the Western multinational companies whose technology it needed to get at the gas. | |
The Shtokman field was discovered in 1988, and in the early 1990s Gazprom began talks with a variety of potential partners. As negotiations dragged on and Gazprom turned down one set of partners and recruited another, the industry’s agenda shifted to shale gas, and global gas prices started to drop. | |
Even before Mr. Cherepanov’s comment, however, the alliance appeared to be faltering. | |
The three companies missed a deadline to make a final investment decision in June. Then, last month, Statoil wrote off the equivalent of $336 million in costs related to Shtokman. The Norwegian company said at the time that it was still in talks with Gazprom about the project. | The three companies missed a deadline to make a final investment decision in June. Then, last month, Statoil wrote off the equivalent of $336 million in costs related to Shtokman. The Norwegian company said at the time that it was still in talks with Gazprom about the project. |
Total is to decide on Sept. 4 whether it will continue as a member of the group, the news agency Interfax reported on Wednesday. | |
If the alliance does collapse, its failure will surely be seen as another concrete sign of the damage inflicted on Gazprom by the success of the shale gas industry in the United States. Gazprom’s sales in Europe are already slumping. | |
Deep under the Barents Sea, the Shtokman field holds an estimated four trillion cubic meters, or 140 trillion cubic feet, of gas, enough to supply the entire world for about a year. But the field lies far above the Arctic Circle, 550 kilometers, or 340 miles, off the Russian coast, in an area buffeted by fierce winds and storms. For energy companies, the climate, ice and darkness for six months of the year all present formidable engineering challenges. | |
This article has been revised to reflect the following correction: | |
Correction: August 30, 2012 | |
An earlier version of this article misstated the date of the companies’ alliance in one instance. It was formed in 2007, not 2008. |
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