The giant Shtokman gas project in Russian Arctic waters faces new delays due to low gas demand and disagreements between shareholders over the project's design, government and company officials said Thursday.
The giant Shtokman gas project in Russian Arctic waters faces new delays
due to low gas demand and disagreements between shareholders over the project's
design, government and company officials said Thursday.
The project's architects had planned to take a final investment decision in
March. But on Thursday, an executive with Shtokman Development AG confirmed
that the timeframe would shift until later in 2011 to green light a project
that has already been significantly pushed back.
The latest delay comes as industry observers forecast a gas glut hitting global
markets in the next few years, due to weakened demand in Europe, new supplies
of liquefied natural gas, or LNG, and a shale gas boom in the U.S.
The Shtokman offshore field--a joint project controlled by Russian state gas
giant OAO Gazprom (GAZP.RS) with France's Total SA (TOT) and Norway's Statoil
ASA (STO) as minority shareholders--is a technically challenging project
located in icy waters in the Barents Sea around 500 kilometers north of
Murmansk.
With reserves of 3.9 trillion cubic meters around 53 million tons of gas
condensate, Shtokman has enough gas to meet worldwide demand for a year.
An original plan envisioned deliveries of pipeline gas from Shtokman in 2013
and LNG by 2014. But one year ago, the project was delayed three years due to
"changes in the market situation and particularly in the LNG market,"
the three shareholders said then.
Now
Russia
is
considering delaying the project again, the deputy head of the Natural Resource
Ministry's Subsoil Agency, Pyotr Sadovnik, told a government meeting Thursday,
state news agencies reported.
"This situation has arisen because the
United
States
is actively using shale gas
and demand for gas is falling accordingly," Sadovnik said, adding that a
final decision has not yet been made.
In 2009, the
United States
overtook
Russia
as
the world's biggest producer of natural gas, as shale gas--employing
technologies that allows producers to extract reserves that were previously
unrecoverable through the use of sophisticated fracturing techniques--transformed
the
U.S.
gas
market.
As a consequence, a wave of liquefied natural gas rerouted from the
U.S.
flooded the European markets, creating oversupply for gas in
Russia
's
main gas export market.
Meanwhile, continued disagreements between the Shtokman shareholders over the
design of the project have still not been resolved, and a final investment
decision on the project will be pushed from March to later this year, vice
president of Shtokman Development AG, Andre Goffart, said Thursday at a conference
in
Moscow
.
Goffart declined to say for how long it could be delayed, but an industry
source involved in the project told Dow Jones Newswires it is unrealistic to
make a final investment decision before July due to a tight timeline.
The consortium originally planned to ship the mixture of natural gas and
condensate gas from the offshore production site through two undersea pipelines
to the shore. But last year, Gazprom said it would be cheaper to install a
floating vessel to separate the gas and condensate before it is sent to shore
through two different pipelines.
The consortium has already received bids from contractors for the original
design. But should Gazprom's proposal be accepted, the project will be delayed
at least one year, because it will take time to get bids ready for the new
design, said Goffart, who is also a vice president at Total.
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