Gazprom’s plans to develop the massive Shtokman gas field in the Arctic may be delayed indefinitely while the Yamal gas projects will probably be the Russian gas monopoly’s number one priority to reflect the new realities of the global gas market. The elements of the game have certainly changed, especially over the last year, and the board of Gazprom is currently reviewing its strategy and priorities, Chris Weafer, chief strategist at Moscow’s Uralsib bank, told New Europe by phone on 27 January.
Gazprom is concerned about losing markets due to the strong emergence of US shale gas extraction and the possibility the US will be a major exporter and competitor of Gazprom. Also, Gazprom has to factor in that China now has a direct link into Central Asia and is seeking more supplies from that region. Moreover, Qatar is commissioning the world’s biggest gas processing plant this year and is also targeting the Chinese market. Finally, Gazprom will have to factor in that there has been a substantial reduction in the forecasts for long-term gas consumption in Europe. “We will not be surprised to see Shtokman put on an almost indefinite delay. Gazprom’s priorities right now will be to develop the Yamal peninsula in particular because that’s the only source of gas to replace the expected depletion from existing fields,” Weafer said. Gazprom seems to have realized that it has to adopt a greater sense of urgency to avoid losing market share in Europe, the opportunity to be a big supplier to China and being short of gas in existing markets, he said.
Gazprom plans to develop its three gas fields in the Yamal peninsula as pipeline gas and Russia’s largest independent gas producer Novatek will develop a fourth Yamal field - South Tambey - as liquefied natural gas (LNG). Gazprom has a 20% equity stake in Novatek. South Tambey is a field Novatek acquired from Gennady Timchenko, who owns big oil trading company Gunvor, in an asset swap last year that increased his stake in Novatek. “We expect that the Novatek gas field will be fast-tracked developed as Russia’s first major LNG project in addition to what has already taken place in Sakhalin I. The next big LNG project would likely be the Novatek project rather than Shtokman in the Arctic. That would allow Russia to get into the LNG business, but it would also mean that Gazprom could concentrate on what are now higher priorities of Yamal and developing a gas source in the Far East to serve China,” Weafer said. On the distribution side, the government is pushing aggressively for the Nord Stream gas pipeline and the construction of a pipeline to China.
The fact that the development of Shtokman seems “highly unlikely” will not affect the Nord Stream pipeline. The Yuzhno Russkoye field, which Gazprom is jointly developing with Germany’s BASF and E.ON, is on time and will be a big source of gas for at least the first phase of the Nord Stream pipeline. “At least the first phase will not be an issue, but Yamal will be required to fill the second phase,” Weafer said. “Without Yamal Russia would almost certainly not have enough gas to fill both Nord Stream and South Stream - that simply would not happen. It needs Yamal for domestic purposes as well as the South Stream pipeline.”
 KGeropoulos@NEurope.eu