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EASTWEEK
Weekly analytical newsletter on Russia, Ukraine, Belarus, the Caucasus and Central Asia (also available in Polish as Tydzień na Wschodzie)

Contents

No. 6(199) | 2010-02-10
Also available in PDF

Analyses

  • Ukraine faces the prospect of a change of government in the aftermath of the presidential election

    Having won the presidential election, Viktor Yanukovych now needs to remove Prime Minister Yulia Tymoshenko from power. If he fails to create a new coalition and form a government led by the Party of Regions, early parliamentary elections should be expected.

  • Russia adopts a new military doctrine

    The content of the doctrine reveals an instrumental approach to the document, which does not lay down the future shape of Russia's foreign and security policy, but rather serves to further the objectives of Moscow's current policy, in particular with regard to Europe and European security issues.

Events

 

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Russian Federation: Gazprom postpones the implementation of the Shtokman project
EASTWEEK

2010-02-10

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The board of directors of the Shtokman Development AG consortium, the operator of the first phase of development works in the Shtokman field on the Barents Sea, decided on 5 February to postpone the implementation of the project for three years. The current situation in the global and European gas markets, which is unfavourable to gas producers, has undermined the economic justification for continuing the costly investment, whose goals include increasing gas exports to Europe and starting the production and exports of liquefied natural gas (LNG) to North America.

According to earlier plans, gas from the Shtokman field was intended to start flowing to Europe via the second branch of the Nord Stream pipeline by 2013, and be exported as LNG to the USA and Canada from 2014. Presently it is not certain if the consortium will start the project implementation in the next few years. If a positive investment decision is taken, gas extraction in the Shtokman field could not start sooner than 2016, and the second phase of the project (LNG production) would have to wait until 2017.
The adjustment of Gazprom's investment plans has been triggered by the current trends in the global and European gas markets, which are negative from the point of view of gas producers. Decreasing demand in Europe and the decline in Gazprom's exports in 2009 (by around 14%, compared to 2008), as well as the oversupply of gas in the EU expected to occur in the medium term, have called into question the purposefulness of starting gas production in the Shtokman field any time soon. A technological breakthrough in the USA – the launch of gas production from unconventional gas sources (shale gas) – and the fact that the world's biggest gas importer has now become self-sufficient, make the purpose of the project’s second phase questionable. The postponement of development work in the Shtokman field confirms the view that the Russian monopoly is experiencing problems with implementing important investment projects. It may also complicate the implementation of the second branch of the Nord Stream gas pipeline which, according to the original plans, was to transport gas from the Shtokman field to Europe from as soon as 2013. <epa>

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