Russ Oil-Gas

27 July 2007 - Upstream OnLine - Russia's state-owned Gazprom is keen to bring more partners into its giant Shtokman gas project either as co-owners of the field operator or as contractors, Gazprom chairman Dmitry Medvedev said today. France's Total recently agreed to take a 25% stake in a special purpose entity that will develop the first phase of Shtokman, a vast field in the Barents Sea that has enough gas reserves to supply the world for a year. "I agree that co-participation in this project makes sense for Gazprom," Medvedev, who is also Russia's first deputy prime minister, told a news briefing, Reuters reported. "There could be two models for this - it could be where our partners join the project as fully fledged participants in the equity of the joint company, or as ... contractors, which in my view ... could create a little less stability in relations." Total's participation has raised some eyebrows as it was not granted an equity stake in Shtokman itself - terms that other contenders to join the $15 billion, 25-year project have balked at so far. The gas monopoly is prepared to let its stake in the field operator fall to a bare majority. ConocoPhillips, Norsk Hydro and Statoil are the main contenders to join, but not the only ones, Medvedev said. "Can someone else come in? They can. The circle of potential participants is quite small because ... they have to be big companies that are well known in that market," he said. "Therefore the choice will be made from the list of companies that you named, and not limited to the ones that you named," he said in response to a reporter's question. Medvedev, seen as a possible contender to succeed President Vladimir Putin in next year's presidential election, took aim at European critics of a proposed Nord Stream gas export pipeline that would run under the Baltic Sea to Germany. Environmentalists have criticised the project and Sweden has suggested that it raises security concerns. Medvedev mocked the project's opponents as "not serious". "Some objections are put forward that are laughable - political, military or linked to spying," he said. "That is really surprising because in the modern world ... it is laughable to say a gas pipeline is a weapon in a spy war." Russia, supplier of a quarter of Europe's natural gas needs, argues that it needs to diversify its export routes to reduce its dependence on unreliable transit countries. There have been run-ins with neighbouring Ukraine and Belarus in recent years, but Medvedev said Minsk's failure to pay a $500 million gas debt should not be overdramatised. "Negotiations are going on. I hope that in the near future this knot will be untied. But untying has to be based on economic principles and not on any others," he said. Belarussian Prime Minister Sergei Sidorsky is due in Moscow next week to try and settle the debt run up by Minsk since Gazprom doubled gas export prices this year. In other comments, Medvedev said no decision would be taken this year to raise gas production taxes, as sought by Finance Minister Alexei Kudrin. He also rebutted critics who suggest that Gazprom is splurging on acquisitions - such as taking control of Shell's Sakhalin-2 and TNK-BP's Kovykta gas projects - when it should be investing more in exploration and production. "The balance of how much to spend on development and how much to spend on acquisitions is always a commercial decision," he said. "I don't think that spending on acquisitions is excessive, or that spending on extraction and transport is insufficient. I think there is a good balance at the moment."