On June 22, 2012, Reuters
has reported ongoing negotiations among Gasprom, Total, Statoil and,
presumably, Shell, about a new framework agreement for the Shtokman
gas project, whose current shareholder pact was about to expire on
July 1, 2012.
The project is currently
in trouble because the shale gas revolution in the United States will
probably make exports of liquefied natural gas to the US unattractive
and because the gas consumption in Europe is currently declining, due
to the economic downturn.
As I am writing this article, the outcome of these negotiations is still unclear.
Project
Timeline
- 1988: Discovery of the Shtokman gas field
- July 2007: Signing of a framework agreement between Gasprom and Total
- October 2007: Signing of a participation agreement by Statoil
- 21 February 2008: Establishment of the project company “Shtokman Development AG”
- 2016: Scheduled gas production
- 2017: Scheduled commissioning of the LNG plant
Geographical,
economic and technical aspects
The Shtokman natural gas
field, whose initial reserves are estimated at 3.9 trillion m3,
is located 550 km from the Russian mainland and situated at a depth
level of 340 m.
The project will operate
under harsh climate conditions. For example, annual temperatures in
the region vary from -50 degree Celsius to +33 degree Celsius.
The intended overall
annual natural gas production is 71.1 billion m3. As
regards LNG, an annual capacity of 7.5 million tones is envisaged.
Shtokman
Development AG
Shtokman
Development AG is headquartered in Zug, Switzerland. It is
governed by Swiss law. However, as regards the environmental
regulation, the Shtokman project is governed by Russian Law. Shtokman
Development AG has opened company offices in Moscow, Murmansk, and
the village of Teriberka in Murmansk Oblast.
Today, the shareholders
of Shtokman Development AG are Gasprom, Total, and Statoil.
The company has currently
a nominal share capital of 233 M CHF. Its statutory purpose is to
develop and exploit the Shtokman gas and condensate field. As a
project company, it will bear all the financial and engineering risks
associated with the natural gas recovery and LNG production.
Contracts and
Procurement Policy
Shtokman Development AG has put in
place a “contracts and procurement policy”. The cornerstones of
this policy are the following:
- The company will develop contracts and purchase orders in a manner that is expected to obtain the lowest total evaluated costs […] with due consideration to health, safety and environment, quality and added value.
- The contract and procurement function will follow, in full transparency, a reliable and auditable process.
- A supplier's confidential information shall be protected.
- It is forbidden to communicate private recommendations to specific candidate firms.
- Russian contractors and suppliers are given priority, within a sound competitive environment. A specific local content policy has been put in place in this respect.
Local Content
Policy
The aforementioned local
content policy aims at the development of economics, business, and
manpower of the Russian Federation. Its central stipulation
proscribes that, when placing orders, Russian suppliers and
contractors shall be given a preference if they are comparable with
foreign competitors in terms of
- experience, qualification, and certification;
- work quality;
- cost and timing;
- liability and guarantees;
- major terms of delivery and performance.
In addition to tapping
into existing Russian know how, the local content policy also intends
to develop the commercial and industrial know how of Russian
companies through the Shtokman project, above all in the the Murmansk
region. I should also emphasize that a transfer of knowledge,
technologies, and know-how from international companies to Russian
ones is expressly mentioned in the local content policy. Finally, the
policy also addresses and regulates the tender process for local
suppliers.
Ethics Policy
Shtokman Development AG
has put in place an ethics policy which is, compared to its other
constitutional documents, very detailed. It is basically a list of
“Dos” in business including key concepts such as corporate
fairness, entrepreneurship, professionalism, high quality business
relationships, staff training, integrity, accountability,
responsibility, respect, health, safety, protection of the
environment, rejection of corruption, transparency, absence of
discrimination, permanent dialogue with community groups, avoidance
of conflicts of interest, work life balance, and stakeholder
engagement.
Resources:
- Extract from the Zug Commercial Register for Shtokman Development AG
- Shtokman Development AG – Contracts and Procurement Policy
- Shtokman Development AG – Local Content Policy
- Shtokman Development AG – Ethics Policy
- Shtokman Development AG – Stakeholder Engagement Plan
- Thomson Reuters – Update 2, Talks to save Shtokman gas project go down to wire – June 22, 2012
- Shtokman Review
