StatoilHydro and Gazprom have signed a frame agreement that gives StatoilHydro a 24 percent stake in the management company being set up to develop Shtokman, the giant, 3.7-trillion-cubic-metre gas field in the Russian Barents Sea.

Shotkman Development Company was given ownership for 25 years of Phase 1 offshore installations, pipeline to shore and the onshore processing plants for both liquefied natural gas, or LNG, and piped gas. Gazprom owns 51 percent of SDC and Total 25 percent.

StatoilHydro said no final investment decision would be made before the second half of 2009.

In Murmansk, Scandoil.com had earlier learned Shtokman will cost “$16 billion overall” with a gas pipeline to Vyborg on the Baltic coast and plant for liquefied natural gas west of the city at Tyribuka village. The Shtokman timetable is made up of “seven or eight” projects due to be delivered between 2013 to 2015.

"We have giant reserves of gas in the Barents Sea, while our partners from Norway have good experience in production and transportation of gas in harsh Arctic conditions,” GAzprom chair, Alexei Miller, said in a statement.

Until the final investment decision is made, StatoilHydro's exposure is limited to the company's share of the cost of planning and studies. Total, the project’s other partner, made a similar announcement when selected in July 2007.

The Shtokman field is the world's largest undeveloped offshore gas field and is seen producing 23.7 billion cubic metres per day in its first phase — the building of LNG and piped gas infrastructure.

Former StatoilHydro chair Eivind Reiten recently told Scandoil.com that combining StatoilHydro ended competition between Statoil and Hydro that had undermined talks with Gazprom. He said the October 1st union of Statoil and Hydro let the new entity “play the Norwegian card more effectively”.

At the time, he would not comment on re-sell amounts for Shtokman gas ahead of an agreement.

ws@scandoil.com

Tags: Shtokman