MOSCOW, July 13 (RIA Novosti) - The cost of the first project phase to develop the vast Shtokman natural gas deposit off Russia's Arctic coast has been estimated at $15 billion, a Gazprom [RTS: GAZP] top manager said Friday.
"In preliminary estimates, the first phase of the project will cost $15 billion," the deputy chairman of the energy giant's management committee, Alexander Medvedev, said.
Gazprom and French oil major Total signed an agreement Friday on cooperation in developing the Shtokman field in the Barents Sea, which holds an estimated 3.7 trillion cubic meters of natural gas and 31 million metric tons of gas condensate.
Gazprom CEO Alexei Miller said earlier that the first stage of the project aims to produce 23.7 billion cubic meters of natural gas annually by 2013, and to start production and delivery of liquefied natural gas in 2014.
He said a new operating company - a special purpose vehicle (SPV) - would be set up to organize project funding, design, and construction. Gazprom will hold 75% in the SPV, while Total will receive the remaining 25%. Gazprom could reduce its stake in the future, offering other foreign partners an aggregate interest of 24%, ensuring that Gazprom retains at least 51%.
Gazprom's deputy head, Alexander Ananenkov, said Friday that the new company would be formed in the very near future, but that the project would go ahead even before it is up and running.
Gazprom is set to retain full ownership of the license-holding company, therefore controlling the entire output.
The deposit is the only source of natural gas for the ambitious Nord Stream gas pipeline that will run under the Baltic Sea from Russia to Germany.
The decision to involve a foreign company comes in spite of the Russian energy giant's announcement last October that it would develop the Shtokman deposit on its own. The company had previously short-listed U.S. majors Chevron and ConocoPhillips, Norway's Statoil and Norsk Hydro and Total to develop the field.
