PRESS: Total to quit Russia's Shtokman project over sanctions

MOSCOW, Jun 24 (PRIME) -- France’s Total will transfer 25% in Shtokman Development AG, established in 2008 to develop the Shtokman gas field, to Russian gas giant Gazprom, business daily Vedomosti reported Wednesday.

Initially, Gazprom held 51% in Shtokman Development AG, while Total owned 25% and Statoil had 24%. The agreement expired in 2012, and no investment decision was made. Statoil returned its stake and wrote off U.S. $335 million of losses, while Total remained in the project and wrote off $350 million of losses only in April 2014.

In April, Total said it received the French government permission to work on three projects in Russia – the Yamal LNG, the Kharyaga project and the Termokarstovoye field. Total had problems in finding project financing for the Yamal LNG due to the sanctions and stopped to buy shares of independent gas producer Novatek. But it did not say whether sanctions hurt the Shtokman project.

Sanctions are the main reason for Total leaving the project, Sberbank CIB analyst Vitaly Nesterov and GL Financial Group’s portfolio manager Sergei Vakhrameyev told the business daily. Vakhrameyev added that low oil prices also contributed to the issue as the Shtokman may pay off only with a gas price of $460 per 1,000 cubic meters, which is possible if oil prices double from the current level.

Gazprom has promised to invite Total to the project in the future. At the moment due to excessive gas production in the U.S., the project has lost its relevance, Vakhrameyev said.

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