February 5, 2012
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Gazprom: No LNG Plant for Shtokman Unless SEZ Scrapped

"We can not build a LNG plant in Teriberka unless plans for the establishment of a special economic zone in the area are abandoned", Gazprom says.

Regional authorities in Murmansk are working for the establishment of a special economic port zone in Teriberka, the Shtokman project hub on the Barents Sea coast. That will not be in interest of the Shtokman partners, Gazprom says. The company will not be ready to construct the projected LNG plant if the economic zone plans are materialized, newspaper Izvestia reports.

The federal law on special economic zones includes regulations on raw material processing, and the zone life span covers a maximum of 20 years. In addition, the zone operators will need to be registered locally.

The plans for the establishment of the zone should be abandoned. Alternatively, law must either be abolished, or revised, if we are to build a LNG plant in Teriberka, Gazprom argues.

According to the newspaper, the trouble surrounding the planned economic zone is a main reason for the delay with the final investment decision. As previously reported, the Shtokman partners in late December once again decided to postpone the investment decision. The decision will instead be made in March 2012, Gazprom, Total and Statoil say.

Financial issues are another key reason for the delays. The Shtokman partners are pushing hard on the federal authorities for tax benefits. Statoil has on a number of occasions stresses that the Shtokman project remains not profitable unless tax breaks are introduced. The tax issue has to be resolved before the final investment decision is taken, Statoil CEP Helge Lund underlined this week to NRK Radio.

Meanwhile, the Shtokman partners are under increasing time pressure. After several postponements, the project launch was last year rescheduled to 2016. That might prove far too ambitious. According to two experts well familiar with the project, the situation today remains very unsettled. Even the project feasibility study is not yet ready, they told Izvestia.

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