Location of the large Shtokman gas field in the Barents Sea (Gazprom map)
From the Barents Observer: Shtokman in jeopardy?
Several major industrial projects are under planning in the Barents Region. Now, the financial crisis and falling raw material prices could result in the postponement of several of them. As BarentsObsever recently reported, leader of the Shtokman Devlopment Company, Yuri Komarov already last month expressed concern about possible Shtokman consequences from the world financial crisis. The situation looks far more gloomy today. Gazprom is heavily dependent on loans and credits for the development of new projects. Now, the credit market is drying out, and new major loans for Gazprom might be put on hold.
The financial crisis comes in a situation when Gazprom is under pressure to develop new fields in order to meet the rapidly growing demand. The company has major field development plans for the next years. According to the company’s General Development Plan for the period until year 2030, total investments will amount to 647 billion USD.
Already in 2008, the company will step up investments. This August, the company informed that it will increase this year’s investment programme with about 25 percent, an announcement which was met with scepticism by analysts, who argued that the spending signals "potential value destruction" for the stock.
At the same time, Gazprom is from before heavily burdened by debts. As previously reported by BarentsObserver, the company now has up to 1,5 trillion RUB (42 billion EUR) of debts.
Leader of the Rambøll Storvik company Rune Rautio believes the Shtokman project will not experience any immediate threats from the financial crisis. He maintains to BarentsObserver that key parts of the project is financed by foreign partners Total and StatoilHydro and that Gazprom will not be all dependent of credits. He does however not exclude project consequences should the crisis be long-lasting. Mr. Rautio also notes that Gazprom is dependent of a certain level of oil and gas prices in order to profit from the project.
Gazprom and its partners Total and StatoilHydro intend to start production in the huge Shtokman gas field by year 2013.
Not only oil and gas projects might suffer from the crisis. Also a number of grand mining projects are in the pipeline, both in Northwest Russia and northern Finland, Sweden and Norway. With raw material prices falling, several of the investors might now end up reconsidering their plans.
February 16, 2009: Here's an early December clipping from the Wall Street Journal on this issue: Credit Is Issue for Gas Field:
The global credit crisis could delay the launch of Russia's giant Shtokman natural-gas field, according to the chief of the project's operator.
"One of the most significant questions is the liquidity in the financial market and the possibilities of attracting credit," said Yuri Komarov, chief executive of Shtokman Development. "This is one of the most serious issues which will determine the start of the [Shtokman] project," Mr. Komarov said, without providing further details...
"We hope that the financial crisis will be over by the time we enter the market," said Mr. Komarov, who was appointed to his post by Gazprom. The massive Arctic project will remain economically viable if oil prices stay around $50 or $60 a barrel, he added.
The consortium hopes to raise the first funds next year, when it plans to approve a final investment plan for the project's first phase. Total and StatoilHydro declined to comment....