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Tuesday, August 08, 2006

Home Time Running Out for Americans at Shtokman

Aug. 04, 2006 Kommersant - by Natalia Grib - Gazprom's selection of partners for the development of the Shtokman gas condensate deposit is taking on political overtones. U.S. Secretary of Energy Sam Bodman criticized the slow pace of the decision-making process. Deputy chairman of the Gazprom management board Alexander Ryazanov retorted to Kommersant that that was the business of the Gazprom board and not of American officials. The Russian gas monopoly has already begun searching for candidates to replace the American ConocoPhillips and Chevron companies in response to the U.S. position on Russia's WTO accession. Reuter's quoted Bodman yesterday as saying that he hoped the Russian government would make a choice on Shtokman partners soon. That deposit, in the Barents Sea, has proven reserves of 3.7 trillion cubic meters. Gazprom is picking two or three partners from a shortlist of five companies. Those companies are the French Total, Norwegian Statoil and Hydro and American ConocoPhillips and Chevron. Gazprom promised to make its choice this month, but Kremlin sources say that the selection process may take the rest of the year. "Their decision-making process – I find it very difficult to understand, frankly. I suppose it's possible that they never decide," Bodman said. He has reason to worry. Besides the fact that this is the fifth shortlist that has been compiled since the deposit was discovered in 1988, the technology for gas transport is not well enough developed yet to allow a pipeline to be laid to the deposit, due to drifting icebergs. Gazprom is picking partners for only the first of three phases of development of the deposit. At this stage, it is crucial to find technology that will minimize the risk of an ecological catastrophe in the Artic waters. The Norwegian companies already operate in nearby waters, making them attractive partners. The French Total is the world's largest liquefied natural gas dealer. Gazprom is now in negotiations with the Russian Naval Fleet on the use of bays at Vidyaevo, Murmansk Region, for the construction of a liquefied gas plant. After the failure of the Russian and U.S. presidents to reach an agreement of Russian WTO accession, Russian President Vladimir Putin stated that the Norwegian contenders were "professional" and "comfortable" partners for Shtokman. A small Canadian company called Sempra, which has four regasification terminals and a client base in the United States, may be chosen over the American giants as well. Ryazanov is said to have met with Sempra representatives in London recently. A source has also reported that there will be negotiations soon in Moscow on deliveries of gas from Shtokman to Japan. If the American companies are not included in the first phase of the project, they could still be chosen for the second or third phases.

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