A Gazprom delegation headed by Yury Shamalov, Director General of Gazflot(Gazprom’s wholly owned subsidiary) took part in a solemn ceremony dedicated to the laying at the Vyborg Shipbuilding Plant of the first of two semi-submersible platforms for drilling production wells on the Shtokman field.

“Today we took another important step towards developing the Russian Arctic shelf resources and shaping a new oil and gas production center there. Implementation of the Shtokman project being prioritized and strategic for Gazprom will enable the Company not only to diversify supplies of pipeline and liquefied gas to the markets of the Atlantic basin countries, but also to bolster Gazprom’s major player position on the LNG market.

To develop the Arctic shelf fields Gazprom will utilize only the most advanced and high-technology equipment satisfying the Company’s highest technological and environmental standards. Laying of the first drilling platform exactly in Russia represents a vivid example of successful cooperation between Gazprom and Russian shipbuilding companies.

Implementation of Gazprom’s plans on further developing the Arctic shelf as a new oil and gas production province predetermines the Company’s demand for developing its own drilling and production platforms, technological fleet and vessels for LNG transportation. Meeting this challenge Gazprom will fully utilize the potential of Russian machine building enterprises,” said Yury Shamalov.

Background:

The Shtokman field is located in the central part of the Russian sector of the Barents Sea offshore.

Shtokman’s C1+C2 reserves make up 3.8 tcm of gas and some 31 mln t of gas condensate.

The Shtokman gas condensate field development project is of strategic importance to Gazprom. This field will become a resource base to deliver both Russian pipeline gas and gas produced with the use of LNG technologies.

Sevmorneftegaz (a wholly owned subsidiary of Gazprom) holds a license to search for, explore and produce gas and gas condensate from the Shtokman field.

Gazprom determined Total (France) and StatoilHydro (Norway) as partners to execute the Shtokman project.

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

The special-purpose company will be the owner of the infrastructure of the first phase of the Shtokman gas condensate field for 25 years starting from the field commissioning date.

The relations between the special-purpose company and Sevmorneftegaz (the license holder for the Shtokman field development) will be based on a contract stipulating that the Company will bear all the financial, geological and technical risks associated with the gas and condensate recovery and the production of LNG.

In November 2007 following the results of an open bidding Gazflot (a wholly owned subsidiary of Gazprom) and the Vyborg Shipbuilding Plant signed a contract for the construction of two semi-submersible drilling rigs to drill production wells on the Shtokman field. Samsung Heavy Industries, a South Korean company, was identified as a subcontractor to construct the topsides of the platforms.

The platforms are intended for operation in a harsh natural and climatic environment, stand low temperature and waves up to 32 m high. The platforms are capable of performing exploration and production drilling of up to 7,500 m oil and gas wells at  70 - 500 m water depth.

The construction of the first drilling rig is due in the fourth quarter of 2010 and of the second – in the first quarter of 2011.

At present, the shipbuilding companies of northwestern Russia are already fulfilling Gazprom’s orders for the Arctic shelf development. In Severodvinsk FSUE PO Sevmash is constructing the Prirazlomnaya offshore ice-resistant stationary platform and FSUE MP Zvezdochka – the Arkticheskaya jack-up floating drilling rig.

Gazflot, a Gazprom wholly-owned subsidiary, specializes in geological exploration and sea & river vessels engineering and construction. In particular, as part of Gazprom’s investment projects implementation, Gazflot is engaged in engineering and construction of floating drilling rigs designed for offshore oil and gas field exploration and development.