Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Putin Favors Norway for Shtokman

StatoilStatoil's Snoehvit gas project in the Barents Sea. Putin said Norway had infrastructure that would benefit Shtokman.
STRELNA, Leningrad Region -- President Vladimir Putin gave a boost late Sunday to Norwegian companies' bid to partner with Gazprom in developing the massive Shtokman natural gas field, saying they were favored "for many reasons."

Speaking at a news conference on the second day of the Group of Eight summit, Putin praised Norwegian companies' professionalism when asked about energy deposits in the Barents Sea, of which Shtokman is by far the largest.

Norwegian companies Norsk Hydro and Statoil are on the shortlist to help develop the 3.7 trillion cubic meter gas field, as are France's Total and U.S. majors Chevron and ConocoPhillips.

"You have probably heard that we are holding talks with several countries on the development of different fields," Putin said. "But companies from Norway are among the first on this list. This is a very comfortable partner for us for many reasons. First of all, they don't go around with their noses in the air; they work objectively, very professionally."

"They have developed infrastructure in the north, but declining production," Putin said. "And we -- this is completely natural -- can combine our efforts without spending money on building additional infrastructure no one needs."

Norsk Hydro and Statoil have long been thought favorites for the project, in part because Gazprom executives have repeatedly praised the companies' technical expertise in undersea drilling. Analysts have also said an implicit understanding that Norwegian companies would partner in Shtokman helped solve previous Barents Sea territorial disputes between Russia and Norway.

The hopes of Chevron and ConocoPhillips, by contrast, appear to be tied to the fate of Russia's World Trade Organization bid, which faced another setback this weekend when Putin and U.S. President George W. Bush failed to conclude a bilateral deal.

In April, Putin's aide and G8 sherpa Igor Shuvalov told an audience of U.S. officials and analysts in Washington that the participation of U.S. companies in the project was linked to the United States approving Russia's WTO bid. A Kremlin spokesman initially confirmed the link to The Moscow Times, though Russian officials have since backtracked.

The United States is the only country in the WTO's Russia accession group that has yet to sign a bilateral deal with Russia.

Industry and Energy Minister Viktor Khristenko also gave a nod to the Norwegians on Sunday when asked about potential Shtokman partners. Speaking at a G8 briefing, Khristenko said it was vital that Gazprom's Shtokman partners have a strong track record of protecting the environment, concluding, "our Norwegian partners have been very successful in this respect."

Khristenko also defended repeated delays to the choice of Shtokman partners, saying the scale and complexity of the project made it important not to rush the decision. A decision was most recently expected in August, though a statement on the Industry and Energy Ministry's web site says it could be delayed until the end of 2006.

The Shtokman project is seen as central to Russian-U.S. energy relations, as most Shtokman gas is to be shipped to the United States in the form of liquefied natural gas, or LNG. Though the participation of a U.S. company would help ease access to U.S. markets, analysts have said the project could proceed without them, noting that Statoil has already been marketing LNG to the United States for several years.

The two countries have been without a major bilateral energy deal since the October 2003 arrest of Mikhail Khodorkovsky, which effectively ended plans by ExxonMobil and Chevron to acquire a stake in what was then Russia's largest energy company.