September 5, 2012
On August 29 Gazprom’s representatives have officially recognized impossibility of the Shtokman project implementation. Since 2007 Russia has been trying to implement the idea of gas production from the Shtokman field. Stocks estimated by Gazprom were astonishing – 3,8 trillion cubic meters of gas and 53,4 million tons of condensate. However, nothing went further than application of funds.
In the course of 4 years the operator of the project, Shtokman Development AG (51% – “Gazprom”, 25% – “Total”, 24% – “Statoil”), spent about 1,5 billion dollars. However, the term of gas production was constantly postponed. And this time participants of the project recognized that at this stage the implementation of the project is simply impossible. Earlier, the parties named different approaches to the way of gas production and transportation as the official reason of continuous postponement. However, the main reason of delay of the project became precisely the uncertainty with future deliveries and price of gas. In addition, expenses needed for the realization turned out to be too huge. Earlier, investments into the project were roughly estimated around 30 billion dollars.
From the moment of start of the Shtokman field development, the demand for gas in Europe has been constantly decreasing. And in the next years “Gazprom” will face the problem of sale of gas in the countries of Europe. The situation is also complicated by the reorientation of the US for LNG export to Europe which is expected in 2016. These problems became the subject of concern of the Russian government. According to Russian mass media, the Ministry of Economic Development of the Russian Federation doubted the efficiency of Gazprom’s investments. It is possible to disagree with this; however, the “freezing” of the Shtokman project is indicative in this case. After all, despite possible speculative influence of the specified event upon Gazprom’s stock value, reputational losses for Russia can be a lot more tangible. And in that case changes of a business model in the approach to Shtokman field development won’t be of help any more. And the entry of new partners, such as Shell or ExxonMobil, won’t cure the situation as well.
Today, the loss of positions by Gazprom as an export monopolist (both in Europe and in Ukraine) already lies on the surface. The same thing has to do with the internal Russian market, where the part of gas supply by independent gas producers is constantly growing (following results of the last year – to 25%). Anyways, Gazprom needs to undergo high-quality changes. And the thing is even not in the replacement of the top management of the monopoly or structural changes. The company needs to become “more liberal” taking into account the world environment of the energy market. It will be already impossible to ignore the development of LNG-technology and the influence of the “shale” component.
Author : Ivan Matiyeshyn