Shtokman to Focus on LNG Production

Gazprom plans to shift focus its Shtokman field, abandoning plans to build a pipeline supplying Europe to that of LNG production for Asian markets.

Faced with ballooning costs, repeated delays and reportedly increasing doubts amongst partners Statoil and Total SA, Gazprom is hoping to keep the project alive by securing customers in Southeast Asia and potentially markets in Latin America.

Following talks with President Vladimir Putin and Statoil chief executive Helge Lund, Gazprom chief Alexei Miller said a formal decision to switch to LNG would be finalised at a conference in Saint Petersburg next month.

"The balance between pipeline and liquefied gas is changing toward LNG. We are talking about 100 percent liquefaction except for gas intended to supply (the nearby) Murmansk region,"  Miller as was reported as saying.

The Kommersant business daily had earlier on Friday reported that Statoil, with a holding of a 24 per cent stake, was about to leave the project because it was concerned about cost overruns and Gazprom's plans to switch to LNG.

On Wednesday, Gazprom said that that it was reviewing the structure of the consortium. Royal Dutch Shell has been reportedly has entered into talks to take a stake in the Russian project.

Miller has said that Gazprom was examining the possibility of new partners entering the project.

Total said earlier this week that it would retain its entire 25 per cent stake in Shtokman.