Gazprom is currently dependent on four giant gas fields that are either declining, or about to decline. Its hopes for new domestic gas lie in the Shtokman gas field in the Barents Sea, or in the fields on the Yamal Peninsula. Gazprom may not have enough resources to develop both. Anders Aslund explains (Gazprom's Risky Strategy):
Gazprom needs to develop one of two truly gigantic fields, Yamal in northerwestern Siberia or the Shtokman offshore field north of Murmansk. Either is likely to cost something like $50 billion to develop, and development will take a decade. Gazprom has agreed to exploit the Shtokman field with Total and Statoil-Hydro, while it intends to develop Yamal on its own.
Alas, if Russia's future gas production hinges on either of these fields, it is likely to decline from 2010 to 2016, and it might fall into sharp decline. Moreover, the required investment is so large that Gazprom might be forced to choose one of the two projects, probably Yamal, as it is technologically easier. If so, the company might let its foreign partners down at Shtokman, further undermining confidence in its partnership.
Gazprom has recently announced cut-backs in investment funding in the Shtokman field and an increase in Yamal: Gazprom: less for Shtokman, more for Yamal:
Gazprom now says it plans to invest 14.7 billion RUB (400 million EUR) in Shtokman compared with an earlier planned 16.2 billionRUB, Reuters reports with reference to Interfax.
Meanwhile, Gazprom ups investments in the development of the Bovanenkovskoe field in Yamal by 10 billion RUB to around 105 billion RUB.
While production start at the the Bovanenkovskoe field is estimated to 2011, the Shtokman field is to be in production from 2013.
This more recent story also talks about increased investment in Yamal, but doesn't mention reallocation of funds from Shtokman (Gazprom boosts 2008 investments in Yamal):
The state-run monopoly may raise its investment budget for 2008 by about 25 percent, Interfax reported Thursday, citing deputy chief executive Valery Golubev. The news was followed by a 4 percent fall in the company’s stock trading, newspaper Moscow Times reports.
It is only two months since Gazprom said it would increase investments with 16 percent. The additional 25 percent increase might now threaten to significantly strain the company’s economy.
Analysts believe Gazprom might be unable to invest the big money efficiently. The spending signals "potential value destruction" for the stock, JPMorgan's said.
Gazprom confirms that the increased spending will help it step up the development of the Yamal Peninsula in the Russian Arctic. The company intends to complete the development of the biggest of the regional fields – the Bovanenkovskoe – by year 2011. The construction of a railway and a pipeline is already started.
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