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A focus on the delays to the Shtokman project — and what they say about Gazprom. For PE’s August issue, where the rest can be found.

THE SHTOKMAN gas project epitomised the power of the resource holding nations, such as Russia, over the Western majors that had over the decades before commanded control of the world’s energy sector. Now, with news that the project will probably be delayed, it symbolises the ebbing of power away from these countries. Russia, which spent the last few years in the vanguard of the resource-nationalism movement, is suffering disproportionately as the balance of power shifts again.

It is worth remembering just how ground-breaking the Shtokman contract was. When, in 2007, state-controlled Gazprom signed up Total to become one of its partners on the Barents Sea gasfield it ended a long and highly politicised selection process. Russia had used bidding for the contract as a bargaining chip in negotiations over its entry to the WTO. Total’s selection over other majors, analysts said at the time, was an overture from Russia’s then-president Vladimir Putin to his French counterpart Nicolas Sarkozy, who had warned Russia that he would take a harder line on the country than his predecessor, Jacques Chirac. The line softened thereafter.

And when the details of Total’s contract emerged, they exemplified the shift of power away from the majors. Total won a 25% stake – but not of the gasfield, one of the world’s largest, or its 3.8 trillion cubic metres (cm) of gas. Its stake was – and is – in Sevmorneftegaz, the company that will develop the first phase of Shtokman. Gazprom, which says that phase will eventually produce 23.7bn cm/y of gas and 7.5m tonnes a year of liquefied natural gas (LNG) – originally by 2014, but now at some unspecified date in the future – holds 51% of the development firm. Norway’s StatoilHydro was later awarded the remaining 24%. The reserves belong to Gazprom, it says. (…) The rest is for subscribers, I’m afraid.