Total to Join Shtokman with vast authority

Energy Trade

Procedures for Total entry into the Shtokman project of Russia have been recently disclosed. The French company will share all risks with Gazprom, get wide authority in the project, add up to 300 billion cu meters of gas to its statement of assets and liabilities and pay roughly $800 million for this chance. The remaining bidders – Norwegian Statoil-Hydro and the US ConocoPhilips – will be offered similar terms in October, but their management power will be more limited.

The procedures for Total’s membership in Shtokman have been reported by two sources close to Gazprom negotiators. “Conditions offered to Total materially differ from those offered so far to other project participants. The matter at stake is the economic parameters, not the political ones,” a Gazprom manager explained. “The extent of the market risk and responsibility for attaining certain budget parameters and for the project dates have been shared pro rata by Gazprom and Total,” another source specified. “The investors will risk their money pro rata the project interest should the launching deadline be violated, any technological problems emerge and in respect of any other risks of the special-purpose company [the project operator].”

Shtokman field of gas condensate has 3.66 trillion cu meters of gas in proven reserves of C1, C2 categories. The first stage of the project provides for the launch of production in 2013 and the annual output of $23.5 billion; the budget is estimated at $14 billion to $15 billion. Shtokman license holder, Sevmorneftegaz, made a contract with the project operator to set up the infrastructure and for the gas production. Gazprom will retain 51%, Total will have 25%. In return, Total will be able to add to the statement of assets and liabilities 25% of 1.22 trillion cu meters to be developed during the first state.

Total will pay certain amount to Gazprom above the required investments for the chance to show these gas reserves in the statement, said a source familiar with the contract conditions. The amount could be about $800 million, the analysts calculated based on available figures. The agreement of Total and Gazprom is valid only for the first stage of the project, i.e. for 20 years to 25 years. (

Lender Liquidity Increases Further Banking

Lender Liquidity Increases Further

Hungary Condemns Iranian Attack on Israel Int’l Relations

Hungary Condemns Iranian Attack on Israel

Home Rental Rates in Hungary Rise 11.7% in March Residential

Home Rental Rates in Hungary Rise 11.7% in March

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D... Hotels

Tribe Hotel Budapest Stadium Recognized at LIV Hospitality D...


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.