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ConocoPhillips Inks MOU with Gazprom to Develop Barents Field, Supply LNG to U.S.

ConocoPhillips Inks MOU with Gazprom to Develop Barents Field, Supply LNG to U.S.

In its second major announcement in less than three months, Russian super major Gazprom signed a memorandum of understanding (MOU) last week with Houston-based ConocoPhillips to study development of the Shtokman natural gas field in the Barents Sea. Under the agreement, Gazprom eventually may supply liquefied natural gas (LNG) to import terminals in the United States.

"The parties will also study the possibility of swap deals involving pipeline gas in North America and the marketing of gas deliveries," Gazprom said in a statement.

The Shtokman field, discovered in 1988, is estimated to contain more than 100 Tcf of gas. The field, in water depths of 1,000 feet, is located 350 miles off the northwest coast of Russia in the South Barents Sea Basin. ConocoPhillips estimates that the field will require up to four phases for full field development.

Gazprom in September secured a six-month binding MOU with ChevronTexaco to undertake liquefied natural gas (LNG) feasibility studies in Russia and the United States (see NGI, Sept. 27). Under the agreement, the two companies will assess the feasibility of an LNG project in Russia, Gazprom's potential participation in a ChevronTexaco-led LNG import terminal project in North America, ChevronTexaco's potential participation in existing Gazprom projects in northwestern Siberia, and possible joint participation in other oil and gas opportunities.

In October, Gazprom signed an MOU with Calgary-based Petro-Canada to consider jointly building an LNG terminal in the Baltic port of Ust Luga near St. Petersburg, Russia by 2009 (see NGI, Oct. 18). The plant would produce 500 MMcf/d of gas and could also eventually receive output from Shtokman. Gazprom also is said to be in talks with ExxonMobil Corp., Norwegian-based Statoil and others to develop an LNG project at Shtokman.

Gazprom also is rumored to be in talks with BP plc on a swap deal that would give BP access to Gazprom's gas pipeline in Europe and give the Russian producer access to the growing U.S. LNG market (see NGI, Oct. 4). Gazprom currently supplies about 25% of Europe's natural gas, and is said to be eager to penetrate the North American market.

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