OREANDA-NEWS. Today at Gazprom Headquarters Alexey Miller, Chairman of the Gazprom Management Committee and Helge Lund, President and CEO of StatoilHydro have signed on October 25 a Framework Agreement on the Principal Conditions of cooperation at the Phase 1 of Shtokman gas condensate field development, Gazprom's press service reported.

In accordance with the Agreement, StatoilHydro receives a 24 per cent stake in the authorized capital of the special-purpose company established for designing, financing, constructing and operating the facilities provided for in the Phase 1 of Shtokman field development project."The Agreement signed today opens a new page in cooperation with an integrated StatoilHydro company. We have giant gas reserves at the Barents Sea shelf, while our partners from Norway have a good experience in the sector of gas production and transmission in the severe environment of the Arctic. Our joint efforts will be the keystone of successful operation in the Arctic region," said Alexey Miller.

"We seek cooperation with Gazprom and Total to execute this cutting-edge project using our technologies, experience and competence in the field of major offshore projects development. We believe that Shtokman project may impact the development and adaptation of technologies allowing effective and environmentally safe operation in the cold and severe climate conditions," said Helge Lund.

The Shtokman gas and condensate field is located in the central part of the offshore Russian sector of the Barents Sea.

Approved by the RF Nature Ministry's State Commission for Mineral Resources in January 2006, Shtokman's C1+C2 reserves make up 3.7 tcm of gas and over 31 mln t of gas condensate.

In October 2006, the Gazprom Management Committee decided that pipeline gas deliveries from the Shtokman field to the European market would take priority over LNG shipments. Shtokman was identified as the resource base for Russian gas export to Europe via the Nord Stream Gas pipeline.

Phase 1 stipulates production of 23.7 bcm of natural gas per annum, gas and LNG supplies via the gas pipeline will start in 2013 and 2014, respectively. Sevmorneftegaz (a wholly owned subsidiary of Gazprom) holds the license to search for, explore and produce gas and gas condensate in the Shtokman field. Sevmorneftegaz will be the single customer for the engineering and construction of Shtokman's offshore facilities including a production complex, pipeline system and LNG production complex.

Gazprom, Total S. A. and Sevmorneftegaz signed a Framework Agreement on the Main Conditions of cooperation at Phase 1 of Shtokman gas condensate field development in June 2007. Under the Agreement, the parties will establish a special-purpose company to manage engineering, financing, construction and exploitation of installations at Phase 1 of Shtokman field development. The company will be the owner of this infrastructure during 25 years, starting from the moment the field is put in operation.

The Gazprom stake in the new company's authorized capital will be 51 per cent, while Total and StatoilHydro will receive 25 per cent, respectively. Upon completion of the exploitation period of Shtokman's Phase 1, Total and StatoilHydro will hand over their stakes to Gazprom.

Relations between the special-purpose company and Sevmorneftegaz will be governed by a contract, by which the new company will bear all financial, geologic and technical risks involved in extraction of natural gas and condensate, as well as in LNG production. 100 per cent of Sevmorneftegaz shares in the company holding the license for the Shtokman field as well as all the rights for marketing of the commodities will be retained by Gazprom.

In December 2006, Hydro and Statoil agreed on merging the oil and gas business and set up the integrated company named StatoilHydro. The said deal was completed on October 1, 2007 where a 62.5 per cent stake of StatoilHydro is owned by the Government and the rest stake is traded on stock exchange.