Total SA's Chairman and Chief Executive Christophe de
Margerie Thursday expressed discontent that Russian gas giant OAO Gazprom never directly discussed a possible change
in partners to develop its Shtokman gas field off the Arctic circle.
The French oil and gas major has a 25% stake in the consortium seeking to
develop what is one of the world's largest natural gas fields. But Wednesday Gazprom vice chairman Alexander Medvedev surprised
Total and 24% stakeholder Norway's Statoil ASA by saying his company was
considering finding new partners and the two European companies had "good
chances" of staying.
"Quite honestly, this isn't all quite clear, this was never mentioned to
me by Medvedev, Mr. (Alexei) Miller (Gazprom's CEO)...It would be good to talk to each
other directly and not through the media," Mr. de Margerie said in an
interview, on the sidelines of the World Gas Conference here.
At the conference Wednesday, Mr. Medvedev also said he had "a good
idea" which companies would be Gazprom's new partners but he declined name them.
When asked by Dow Jones Newswires if he had sought clarifications from the Gazprom executives, Mr. de Margerie declined to
answer.
Gazprom has been trying to develop Shtokman for more
than 20 years, and sealed a partnership with Total and Statoil. The consortium
has already spent millions of dollars on studies and plans for the extraction
and liquefaction of natural gas there under the extreme weather conditions.
The complexity of the project due to technological challenges in such extremely
cold conditions and precipitously low gas prices as well as the emergence of
the U.S. as a gas exporter has called the financial viability of the plans into
question. The final investment decision for the project hasn't been announced
while the three partners have extended negotiations until June 30, fueling
rumors that the whole project is now endangered.
ExxonMobil's (XOM) Chief Executive Rex Tillerson said in an interview earlier
this week that he didn't rule out joining the project, "on the right
terms," though he admitted that "at this point we don't have any
discussions ongoing" with Gazprom.
"We were engaged in the early days on discussions to participate in that
project, we weren't selected," he said. "We had put forward our views
on how the resource might be developed over the long term," he added.
Mr. de Margerie insisted that Total remains committed to the project and that
the priority now was to clinch soon a memorandum of understanding, echoing
comments made Wednesday by Statoil's vice-president Eldar Saetre in an
interview.
"We don't have much time left," Mr. de Margerie conceded.
"We are working intensively with our partners to improve the project, take
the costs down, put together the financial framework," Saetre told the
Wall Street Journal. "Our intention is to stay in the project."
As for the final investment decision, it can't be expected before the end of
this year, he said. "Everything is being reviewed and the final cost will
be known once the plans for the project are completed and finalized," he
said, adding that "with Shtokman, cost and only cost has always been the
problem."
Statoil pledged it could lower the total cost by 30%, he said, adding that this
was doubtful, considering the technical constraints for contractors.
As for the stake that U.K. peer BP PLC plans to sell in its Russian
joint-venture TNK-BP, which it seeks to exit, Total isn't interested, Mr. de
Margerie said.
The French major had been approached earlier by some of BP's Russian partners
in the venture, and the price was then "too expensive." He said:
"If BP sells on the same terms, then we have the same answer."
Speaking about the Elgin Franklin gas field in the North Sea, where production
was halted in March after a substantial gas leak forced the evacuation and the
powering down of the platform, Mr. de Margerie said there was no date set yet
for restarting producing, though he noted it would likely be before the end of
this year.
The group is currently in talks with the U.K. authorities about the safety
procedures and all the necessary conditions to allow Total to restart
production, he said noting there had been no damage to the installations.
The loss of output from Elgin Franklin will dent the group's overall output in
the second quarter, he confirmed. The incident will cost the group around $300
million to $400 million overall, in expenditure stopping the leak and loss of
revenue.