Today in Murmansk the First Murmansk International Economic Forum has been launched under the motto “Arctic Region of 21st Century — Development Strategies”.

Led by Alexey Miller, Chairman of the Gazprom Management Committee, the Company’s delegation is taking part in the event.

As part of the Forum, Alexey Miller delivered a speech themed “Shtokman Project — a Key to the Industrial Development of Northern European Russia”. He stated that the Shtokman development project was not merely a largest project of Gazprom, but a strategic project on the national level.

At present, the Phase I development project, including the project execution schedule, is being prepared for the Final Investment Decision to be taken in the first half of 2010.

The strategic significance of the Shtokman project is conditioned by its vast resources. The Shtokman has been identified as a resource base for gas supplies to Western Europe via the Nord Stream gas pipeline, as well as for Russian liquefied natural gas production and its sales on the markets fully or partially inaccessible for pipeline gas. The speaker emphasized that bringing onstream an LNG plant at the Shtokman field would substantially reinforce Gazprom’s stand as a global gas market player.

The technological uniqueness of the Shtokman project, its scale and the necessity to distribute the project risks — all these factors brought about the need to integrate organizational, financial and engineering capabilities of the world’s largest oil and gas companies.

Alexey Miller emphasized that the project partners had been attracted on the basis of the business model providing that Gazprom Group retained the subsurface license and the title to hydrocarbons. That is, Gazprom is a 100 per cent subsurface user and fully controls marketing of the final products. The foreign partners, Total and StatoilHydro, supply advanced technologies for offshore fields development and LNG production, as well as share the financing obligations and project risks.

“Thus, within Phase I of the Shtokman field development an innovative model is being formed for attracting largest international oil and gas companies to Russian subsurface resources development. The model meets Russia’s national interests and may be applied to other offshore projects,” said Alexey Miller.

Describing the current status of the project, the Gazprom Management Committee Chairman stated that the offshore, coastal and onshore survey program was nearing completion and the main technological solutions had been selected.

In his speech Alexey Miller paid attention to the necessity to strictly comply with Russian and international environmental standards within the Shtokman project execution and underlined that Gazprom would maximally reduce its impacts on the vulnerable regional environment.

The speaker also drew the Forum members’ attention to the fact that the Shtokman field development would have a significant socio-economic effect securing the innovative advancement of the Russian industry, placement of large orders with Russian companies for manufacturing of equipment and rendering of services. It would also boost infrastructure growth within the port complex and help develop drilling bases and construction activities.

Alexey Miller highlighted the participation of the Murmansk Oblast’s companies and enterprises in the project. According to the speaker, Murmansk was meant to become the basic foothold for Russia’s Arctic shelf development and deployment of advanced productions. The Shtokman project will create a stable sales market for the regional companies both at the construction and operation stages. In addition, the project execution will give a powerful impetus to the development of related sectors, employment growth in the Murmansk Oblast, larger budget revenues and implementation of social programs in the region.

The speaker also noted the significance of the Teriberka — Volkhov gas pipeline construction, which, in addition to being the connection pipeline for the Shtokman field and the Unified Gas Supply System, would make it possible to effectuate the socially significant program for the Murmansk Oblast and Karelia gasification that would also step up the region’s industrial advancement.

“Production of the continental shelf resources will move the social and industrial development of Northern European Russia to a brand new stage. At the same time, successful execution of such major projects as the Shtokman, will raise energy security not only in Europe, but globally,” said Alexey Miller summing up his speech.

The full version of the speech is available on Gazprom’s official website www.gazprom.ru.

Background:

The first Murmansk International Economic Forum “Arctic Region of 21st Century — Development Strategies” is held on October 15 to 17.

The Shtokman field is situated in the central region of the Russian sector of the Barents Sea.

The field’s C1+C2 reserves account for 3.8 trillion cubic meters of gas and around 31 million tons of gas condensate.

The Shtokman gas and condensate field development project is of strategic significance for Gazprom. The field will become a resource base for deliveries of Russian gas, both pipeline and LNG, to markets of the Atlantic basin.

It is projected to annually produce more than 70 billion cubic meters of gas from the field with the possible increase of up to 94 billion cubic meters.

Gazprom neft shelf (Gazprom’s 100 per cent subsidiary) holds the license to explore, study and produce gas and gas condensate from the field.

Total (France) and StatoilHydro (Norway) are Gazprom’s partners in the Shtokman field development project.

In February 2008 Gazprom, Total and StatoilHydro signed the Shareholder Agreement on establishing Shtokman Development AG, a special-purpose company to implement the engineering, development, construction, financing, and operation of the first phase facilities intended for the Shtokman field development.

The special-purpose company will own the infrastructure of the first phase of the Shtokman field for 25 years, starting from the date when the field is put onstream.

In 2008 the Vyborg Shipbuilding Plant launched the construction of two semi-submersible drilling rigs for drilling production wells in the Shtokman field — the Polyarnaya Zvezda (Polar Star) and the Severnoye Siyanie (Northern Lights). The rigs can perform exploratory and production drilling of gas and oil wells reaching 7,500 meters at water depth of 70–500 meters. The first semi-submersible drilling rig is to be constructed in the fourth quarter of 2010, the second — in the first quarter of 2011.