1 Shtokman – the most risky project in Arctica Nina Lesikhina

2 650 km from the coast 3.6 trillion m 3 gas 35 mln ton – condensate Shtokman gas condensate field

3 Infrastructure Sub-sea gas pipeline Land pipeline Teriberka- Volkhov (1400 km) LNG Plant – Teriberka

4 Key-player: Shtokman Development?

5 Not possible! High environmental challenges No technologies and experience Huge investments Tight timeframe FINANCIAL CRISIS!!!!

6 Environmental challenges Extreme weather conditions: snowstorms, low temperatures, strong winds, icing Polar nights Drifting icebergs Sea ice Lack of experience Lack of knowledge Lack of technologies

7 No technologies While the Russian mechanical industry can build platforms and hulls, it does not have the skills for production of offshore platform technology.

8 No experience: “Shnøvit” Emissions of CO2 – ton annually, 2008 – 1.5 mln ton

9 Huge investments Investments to the shelf development in – billion rubles: 44 billion rubles - Government 569,8 billion rubles - extra-budgetary resources?????

10 Russian National reserve fund of mineral deposits WHEN: in the end 2008 FOR WHOM: for future generations WHAT INCLUDES: the biggest part of oil&gas fields on the continental shelf WHY: “at present time Russian state companies don’t have needed technologies and enough financial resources for shelf development”

11 Tight time frame preparing of the ground for LNG plant drilling 2011 – building of the modules for LNG plant 2012 – building of sub-sea pipeline 2013 – first gas by pipeline 2014 – first LNG – building of on-land pipeline

12 …and! Hervé Madeo, first deputy director of the Shtokman Development Company “At present, no construction work is taking place in the area of Teriberka – only small research projects”

13 When will be the first gas? Oleg Mnacakanyan general director of «Arcticmorneftegazrazvedka» (AMNGR) «I am afraid that my children will not see it, probably grandchildren»

14 When will be the first gas? Konstantin Dolgunov general director of “Sevmorneftegeofizika” «The first gas from Shtokman will come not earlier 2021»

15 Impact of financial crisis: have to use Russian technologies Gazprom and its subsidiaries look towards domestic suppliers of services and equipment The technology gap in Russian: While the Vyborg Yard constructs the hulls of the rig, the topsides are built in Korea by the SamsungHeavyIndustries. Similarly, the drilling technology will be provided by foreign companies.

16 Impact of financial crisis: development is not profitable “…only about one percent of Russia’s Arctic shelf hydrocarbons can be profitably extracted with the current oil and gas prices” (Ludmila Kalist, Federal Institute of Oil and Geology)

17 Impact of financial crisis: delays “…development programmes for the Shtokman field and the Arctic shelf could be delayed” (V.Ryashin, regional manager in Russia for INTSOK)

18 Shtokman?

19 Bellona demands No oil and gas exploration and production in the seas of Arctic shelf. No nuclearification of oil and gas industry. Governmental demands and regulations should secure cutting-edge technologies and environmental standards aimed at minimizing the negative effects on the environment. Corporate Social Responsibility. Transparency.

20 Thank you for your attention!