Source AP ©

Gazprom and Total sign Shtokman deal

French Total SA was given a major role in developing the huge Shtokman gas field when it signed an agreement with Russia's Gazprom.

Total CEO Christophe de Margerie said the deal will allow Total to book some of the reserves of the field, which is under the Barents Sea and estimated to contain as much as 3.7 trillion cubic meters of gas.

The agreement signed Friday gives Total a 25 percent stake in an operating company that will be created to plan, finance and build the first stage of the project. A separate company, 100 percent owned by Gazprom, holds the actual license to the field.

Gazprom, which is state-controlled, had said last year that foreigners would be hired only as contractors for Shtokman, meaning they would have no direct exposure to revenues or ability to book a part of the field's reserves as they would if they had an equity stake.

But on Friday, de Margerie said Total will be able to book 25 percent of the reserves.

"It's a technicality but, yes, we can book reserves," he told reporters after the signing. "In as far as we are taking risks, and when you take risks you can book reserves."

A Gazprom statement said Gazprom's Sevmorneftegaz unit will continue to own the company holding the license to develop the field and Gazprom itself will retain all rights to market the project's output.

The joint venture between Gazprom and Total will assume all financial, geological and technical risks connected with production, and it will own the infrastructure for 25 years from the commissioning of the field, the statement said.

In announcing the deal Thursday, Miller said one or several foreign partners could get a further 24 percent stake in the operating company. In addition to Total, JSC Gazprom has been in talks with Norway's Statoil ASA and Norsk Hydro ASA, and U.S.-based ConocoPhillips.

Miller said pipeline deliveries from the field would begin in 2013 and that the project would produce its first liquefied natural gas in 2014. The first phase envisages annual production of 23.7 billion cubic meters of gas per year, he said, but it was not immediately clear how production would be split between pipeline gas and LNG.

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