Bloomberg News

Gazprom-Led Group Delays Decision on Shtokman Gas to March

December 30, 2011

(Updates with Total comment in last paragraph.)

Dec. 29 (Bloomberg) -- OAO Gazprom, Total SA and Statoil ASA delayed a decision on whether to invest in the Shtokman natural-gas project off Russian Arctic shores until the end of March as the partners seek exemptions from extraction taxes.

“Some additional time is required to achieve the necessary conditions to take the final investment decision,” according to a statement from the companies’ Shtokman Development AG venture e-mailed after they held a board meeting in Moscow today.

Total is seeking exemptions from Russian gas taxes with the support of French Prime Minister Francois Fillon. Russia raised the mineral extraction tax for gas producers by 61 percent this year and plans to more than double the rate next year. The Russian Finance Ministry has agreed to consider tax holidays for the gas field when the partners submit a development plan.

The companies planned to decide on whether to invest this year, and begin producing gas for shipment by pipeline in 2016 and liquefied natural gas the following year.

“Considering the technological and economic stakes in Shtokman -- a project which ties us together for many years -- it is logical and responsible for the partners to give themselves a few additional weeks to decide on a major investment with the necessary guarantees,” Charles-Etienne Lebatard, a spokesman for Total, said by e-mail today.

--Editors: Tony Barrett, Amanda Jordan

To contact the reporter on this story: Stephen Bierman in Moscow at sbierman1@bloomberg.net

To contact the editor responsible for this story: Paul Abelsky at pabelsky@bloomberg.net


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