Gazprom Planning to Triple Shtokman Output by 2020

Gazprom plans to double gas output from its Shtokman field within three years of launching the giant offshore project in 2013 and sees output tripling by 2020, the project operator said.

Yury Komarov, head of Shtokman Development AG, said the field -- one of the world's biggest offshore gas projects -- could eventually quadruple annual output from an initial 23.7 billion cubic meters if enough gas is discovered.

"We plan to launch phases every four years, so the second phase should start in 2016 and by 2020 we should have developed all three phases," said Komarov, whose company is majority controlled by Gazprom.

Each stage would add 23.7 bcm per year of gas output.

"Thus, total annual output is set to reach around 47 bcm by 2016, and further increase to 71 bcm by 2020," Komarov said in an interview.

Gazprom controls 51 percent of Shtokman Development AG, set up this year to develop the first stage of the field. France's Total and Norway's StatoilHydro hold 25 percent and 24 percent respectively.

Gazprom plans to develop Shtokman, which will supply the West with pipeline and liquefied natural gas, or LNG, in three phases and may add a fourth if enough gas is found.

Komarov said the third stage of the project was expected to produce only LNG.

Located deep in the Barents Sea in the Arctic, the Shtokman deposit carries 3.8 trillion cubic meters of gas reserves -- enough to supply the world for more than a year, according to BP's annual energy statistics review.

Gazprom, the world's largest gas producer, has until recently extracted its gas from onshore deposits. It is relying on Western technology to develop its first offshore projects, such as Shtokman and Pacific island deposits.

Shtokman Development AG this month picked France's Technip and DORIS Engineering, Britain's JP Kenny and two Russian engineering firms to do the FEED (Front-End Engineering Design) for the project's first stage.

The operating company plans to start choosing other contractors -- to build a sea pipeline, a platform and an LNG plant in the village of Teriberka in the Murmansk region -- at the end of this year.

"For us, September 2009 is a key point," Komarov said. "By that time we plan to have held all the tenders and to make the final investment decision."

Gazprom has initially estimated the cost of the first stage at $15 billion.