Gazprom Pledges No Delay on Shtokman

Gazprom may delay some projects in response to weaker demand for gas and a tougher financial climate, but it expects to proceed with the giant Shtokman gas field early next year.

Chief financial officer Andrei Kruglov said Tuesday that the company was still deciding on its plans for the year.

"We have also been prioritizing projects in our investment program ... and this will allow us to see which projects will be financed and which projects are going ahead," he said, speaking through an interpreter.

Key projects will go ahead as planned, however, including developments in the Yamal Peninsula and the Shtokman field, one of the largest gas fields in the world, which Gazprom is developing with France's Total and Norway's StatoilHydro.

"The investment decision will be made in the first quarter of 2010," Alexander Medvedev, deputy chief executive, said of Shtokman.

Shtokman is scheduled to start producing gas for export by pipeline in 2013 and as liquefied natural gas in 2014, according to a company presentation.

Medvedev added that, unusual for an oil and gas project, the Shtokman partners would incur considerable costs in advance of the decision on whether to proceed.

Usually the final investment decision is the point at which companies start to incur high costs.

A spokesman added that the state-controlled company would continue paying dividends in line with its policy, despite some fears that these could be cut because of lower oil and gas prices.

Gazprom management was in London to give a presentation to analysts, prompting, traders said, the resurgence of persistent rumors that the world's largest gas producer may make a takeover bid for the Britain's largest gas retailer, Centrica.

"We are not in talks with either the shareholders or the management of Centrica," Medvedev said.

Gazprom plans to finish a 160-kilometer gas pipeline from the Russian region of North Ossetia to the South Ossetian capital of Tskhinvali in the third quarter, the company said in a statement Tuesday.

Chief executive Alexei Miller met with South Ossetian leader Eduard Kokoity in Gazprom's headquarters on Tuesday, according to the statement.

Gazprom has restored Tskhinvali's distribution network, damaged in the fighting, and on Jan. 24 resumed gas deliveries to South Ossetia from the Soviet-era pipeline that crosses -Georgia from east to west. The link now under construction will let South Ossetia decouple from the Georgian network by getting gas directly from Russia.

Gazprom depends on Georgia to transit gas supplies to Armenia. Gazprom last year completed work on a pipeline that will let Armenia get gas from Iran, reducing its reliance on Georgia.

(Reuters, Bloomberg)