You're reading: Gazprom may focus Shtokman on LNG

(Reuters) - Gazprom may drop plans to pipe gas from the huge Shtokman field in the Barents Sea, focusing instead on producing liquefied natural gas, the Russian firm's deputy head said on Saturday.

"’LNG-only’ is being looked at as one of the possible decisions,"Alexander Medvedevsaid, the first time the firm has raised that possibility.

Medvedev also did not rule out that the firm’s gas exports toEuropewould stay unchanged at 150 billion cubic metres. Gazprom supplies a quarter ofEurope’s gas needs.

"We said that exports will total 154 (bcm this year) but even if it will be at 150 bcm, revenues won’t be lower," he told reporters in the Arctic region of Urengoi where he launched a new gas well.

The Shtokman consortium – Gazprom with a 51 percent stake,France’s Total (25 percent) andNorway’sStatoil(24 percent) – has been mired in debate over the project’s future for several years, with tax breaks being the key issue.

Shtokman’s gas reserves are estimated at 3.9 trillion cubic metres, enough to satisfy a year’s global consumption and making it the world’s tenth largest field.

Last month they pushed back a final investment decision for the third time since March 2011.

Under current tax rules, the economics of LNG are seen as superior to those of the pipeline option, withRussiahaving exempted all LNG projects from duty.

Analysts from energy consultancy Wood MacKenzie have said they see Shtokman as primarily an LNG project.

Gas from Shtokman is in theory due to begin being piped toEuropevia theNord Stream pipelinein 2016 and shipped as more costly liquefied natural gas from 2017.

But the boom in alternative gas production in the United States has closed what was expected to be a key market for Shtokman’s LNG.

Medvedev said gas from Shtokman will be sent to southeast Asia as well asEurope.

"Preparations for a business model of cooperation with foreign partners are under way… The key thing is that, despite prolonged discussions, faith in LNG has returned to them, and we never lost it," he said.