Total Wins 25% Stake in Gazprom's Prized Shtokman Project

Russian state-controlled gas giant Gazprom said Thursday it has chosen Total SA to help develop Shtokman, the world's biggest undeveloped gas field, whose reserves hold enough gas to supply all of Europe for three years. Other companies on Gazprom's shortlist included Statoil ASA, Norsk Hydro ASA, Chevron and ConocoPhillips. Under the deal, Total will receive a 25% stake in a company that will finance and build the project, valued at over $20 billion. The other 75% will be owned by Gazprom, but CEO Alexei Miller said today in an emailed statement the company may offer a 24% stake (leaving it with a majority stake) to one or more additional foreign partners. Foreign expertise is considered crucial in developing Shtokman due to numerous complications, including icebergs. In October, Gazprom shelved its original plan to let multiple foreign partners take equity stakes in the project, saying it would develop Shtokman alone, and bring in outsiders only as contractors. The present decision marks a compromise: Gazprom remains sole owner of the fields license, while Total and any future partners will participate in the company running the project, and share in its profits and risks.

Sources: Bloomberg, Financial Times,
Commentary: Gazprom Intends to Develop Huge Gas Field on Its Own • Total to Increase '06 Capital Outlay To $14.5 Billion • Total S.A. Offers An Integrated Energy Model
Stocks/ETFs to watch: Total S.A. (TOT), Statoil ASA (STO), Norsk Hydro ASA (NHY), Chevron Corp. (CVX), ConocoPhillips (COP)

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