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Goodbye, Shtokman

Neither Norwegian, nor Russian, experts voice much concern about Statoil’s exit from the Shtokman project.

The Oslo Stock Exchange yesterday greeted Statoil’s exit from the project with moving the company share up 2,19 percent. The traders who in 2007 rejoiced when Statoil secured its 24 percent stake in the grand Arctic gas project now seem relieved that the Norwegian oil major appear to have abandoned its troublesome Shtokman partnership with Gazprom.

Also on Norwegian authorities’ level, the Shtokman exit is likely to be perceived without unease. In the northernmost County of Finnmark, the region, which for years with major expectations has awaited the Shtokman development, County Authority Leader Runar Sjåstad says that “Statoil can now have a higher focus on Finnmark, the Barents Sea and other projects”, NRK reports.

Also environmentalists greet the Shtokman exit. Bellona leader Fredric Hauge says his organization long has predicted that the Shtokman would tank and calls the project “doomed.

As BarentsObserver reported, Statoil itself is unlikely to be much concerned about its lost engagement at Shtokman. The company has a number of other projects and bright perspectives in the Norwegian-Russian Arctic. The company has successfully discovered several new fields on the Norwegian side of the energy-rich ocean, and a new partnership agreement with Rosneft secures a significant and long-term engagement also in the Russian part.

Also in Russia, commentators downplay the importance of the Norwegian pullout. Analyst Mikhail Korchemkin says to Vedomosti that other companies, like Shell, can easily take over the role of the Norwegians in the project.

In an editorial, the same newspaper argues that the Norwegian company has had little reason to remain in the Shtokman partnership. As a matter of fact, the newspaper writes, the position of the two foreign Shtokman partners, Statoil and Total, could be compared more with the position of service companies than with true partners. Neither Statoil, nor Total, have been allowed to add Shtokman gas to their balances, and licenseholder Gazprom has proven unable to get the needed tax breaks from federal authorities. “Gazprom should have paid more respect to its foreign partners”, the Vedomosti editorial concludes.

However, the likely exit from the Shtokman project is inevitably a loss of both money and prestige. In 2008, the company’s Shtokman euphoria peaked with the establishment of the Shtokman Development AG, the project operator company. In the Murmansk Economic Forum the same year, a costly event heavily supported by Statoil, the Shtokman project was presented as a key project for the company and for Russian-Norwegian cooperation in the Arctic.

Statoil yesterday confirmed that it has handed in its shares in the Shtokman Development AG in line with requirements of the shareholder agreement. However, Information Director Jannik Lindbæk does not exclude that the company could regain a stake. “There is still an ongoing dialogue on how to make the project profitable”, he told TDN Finans, adding that a decision is likely to be taken in the course of fall.

The third Shtokman partner, French oil major Total, has not yet returned its Shtokman shares, but is likely to do so in the course of August, RBC.ru reports. Also Total does have other major projects in the Russian Arctic. Among them is a 20 percent stake in the Yamal LNG, a competing project with Shtokman, which is developed together with Novatek.

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