Lead, now, go! (LNG): the Shtokman field and Gazprom’s challenging partnership with Total and Statoil

Abstract

In the early 2000s, developing liquefied natural gas (LNG) was declared a priority by the Russian state-controlled energy company Gazprom. As Gazprom had limited experience of LNG production, a logical solution was to establish partnerships with foreign companies. Despite ambitious goals, no major Gazprom-led LNG projects have emerged so far. While this can mainly be explained by market fall-out, scholars have also pointed to weaknesses in Gazprom’s approach to foreign partners. This article analyses the partnership dynamics between Gazprom, Total, and Statoil in Russia’s most ambitious LNG production project, the Shtokman field in the Barents Sea. The three companies established a partnership to develop the field in 2008, but only four years later the project was shelved. In addition to objective parameters, this paper finds that some of the challenges to the partnership resulted from differing norms, ideas, and world-views. These difficulties might, however, have been overcome had the field been commercially viable.

Keywords:

• Russia
• LNG
• Gazprom
• energy
• arctic petroleum

Acknowledgements

Thanks to Arild Moe, James Henderson and Lars Rowe for valuable comments on earlier drafts of this article.

Notes

1. Translation by the author of the original wording: ‘В течение трех лет Газпром заманивал европецев и американцев’.

2. For example, Statoil released a statement on their website on 9 October 2006 under the heading ‘Gazprom to go it alone on Shtokman’: ‘Russian energy group Gazprom has today stated in a press release that they will develop the Shtokman field without foreign partners (…). Today’s announcement by Gazprom was not expected’.

3. Natural Gas World, retrieved from https://www.naturalgasworld.com/statoil-steps-back-from-shtokman-stake

4. Vedomosti, ‘Газпром’ может отказаться от разработки Штокмана, (3 June 2013). Interview with Kruglov. Retrieved from http://www.vedomosti.ru/business/articles/2013/06/03/shtokman_ostavlen_na_buduschee, (accessed 17 January 2017).

5. Gazprom, Штокман остается Российским проектом [Shtokman remains a Russian project], «Газпром» No. 3, Март 2008 [March 2008].

6. Author’s translation of: ‘Тотал с бесспорным преимуществом выиграл этот тендер. Экономика четко говорила что именно эта компания является победителем’.

7. Kommersant, В проекте такога масштаба мы все в одном лодке глава Тотал Кристоф де Маржери оценивает перспективы работы в России, (16 July 2010). Retrieved from http://www.kommersant.ru/doc/1419441, (accessed 22 February 2017).