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Gazprom to transfer Shtokman phase 2 and 3 functions to new subsidiary

February 05, 2014, 22:15 UTC+3 MOSCOW
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MOSCOW, February 05,  /ITAR-TASS/. Russia’s gas producer Gazprom will create a new subsidiary for Barents Sea projects, including Shtokman phases 2 and 3.

The company Gazprom Dobycha Shelf will move to Sakhalin to focus on Gazprom’s offshore projects in the Sea of Okhotsk. It will be located in Yuzhno Sakhalinsk and will change its name to Gazprom Dobycha Shelf Yuzhno Sakhalinsk.

A new subsidiary, Gazprom Dobycha Shelf Murmansk, will be created for operations in the Barents Sea. It will be located in Murmansk.

Gazprom Dobycha Shelf is a 100 percent Gazprom-owned company. It was established to develop offshore projects. It is developing the Kirinskoye field and Shtokman phases 2 and 3. The company is registered in Moscow and has representative offices in Murmansk, Yuzhno Sakhalinsk and St. Petersburg.

In October 2013, Gazprom extracted the first gas from the Kirinskoye field where Russia’s first subsea production facility is installed under Sakhalin III project. The company plans to begin commercial gas production at the field in 2014.

Discovered in 1988, the Shtokman gas and condensate field is located in the central part of the Russian sector of the Barents Sea shelf, about 600 kilometres northeast of Murmansk, where sea depth varies between 320 and 340 metres.

C1 reserves of the field make up 3.9 trillion cubic metres of gas and 56 million tonnes of gas condensate, with 3.8 trillion cubic metres of gas and 53.4 million tonnes of gas condensate located within Gazprom's licensed area.

The Shtokman field development is divided into three phases. Phase One and Phase Two facilities commissioning will allow for respective annual production of 23.7 and 47.4 billion cubic metres of gas. The field will reach its design capacity of 71.1 billion cubic metres of gas a year through implementing Phase Three. This volume is comparable to the annual gas output of Norway, one of the major European gas exporters.

The project features a diversification capability - simultaneous supplies of pipeline natural gas to Europe and liquefied natural gas to Europe and North America, which may be altered according to market conditions.

The project is highly competitive as there are no transit countries crossed by the pipeline gas running from the Shtokman field to Western Europe via the offshore Nord Stream pipeline, the feedstock base is quite close to LNG markets, and low temperatures prevail in the region thus reducing energy consumption required for gas liquefaction.

Shtokman field production is scheduled to begin in 2016. The LNG Plant is scheduled to be commissioned in 2017.

The unique technical nature of the Shtokman project, its scale, together with the need to spread the project risks - all this created a need to combine the financial and engineering strength of some of the world's biggest oil and gas corporations.

Phase One of the Shtokman Project is being implemented by Shtokman Development AG, a company established in February 2008. The plan for Phase One is to produce 23.7 billion cubic metres of natural gas per year.

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