Gazprom to abandon plans for Arctic gas project?

Russian energy tycoon Gazprom is about to shelve one of its flagship projects in the Arctic because of rising costs and tough conditions at the area. The company was preparing to develop the vast Shtokman gasfield in Russia’s Barents Sea, in an area which is thought to contain as much as 25% per cent of the world’s yet-to-be-discovered hydrocarbon resources.

Rivals are facing similar challenges to develop fields in the far North. Royal Dutch Shell is fighting legal issues to start a drilling program off the coast of Alaska and has spent US$ 4.5 billion on the venture without drilling a single well. Gazprom’s Shtokman has deposits containing 3.9 trillion cubic meters of gas, more than the entire Norwegian continental shelf, but even this amount of hydrocarbons was not enough to compensate its location, 600km off the coast of northern Russia, in an area strewn with icebergs and in darkness for half the year, and the collapsing prices of natural gas in the international market.