URENGOI: Gazprom may ditch plans to pipe Arctic gas from its Shtokman project, a top executive said, potentially giving Russia's top energy firm more leeway to sell supplies from the huge field to customers outside Europe.

Gazprom may instead focus on producing more easily transportable liquefied natural gas at the Barents Sea deposit, deputy chief executive Alexander Medvedev said - the first time the company has mentioned that option. The comment is likely to stoke concerns in Europe about whether Russia can be relied on as a major long-term gas supplier, given rising demand for the fuel in Asian markets.

European companies have complained that Gazprom - which supplies a quarter of the continent's gas needs - has not met their requests for extra deliveries during the current cold snap. Gazprom said it has been unable to meet all the additional demand.
Prime Minister Vladimir Putin, who will serve a third term as president from May, said last month that Russia should wean itself off its dependency on European pipeline gas deliveries and expand into super-cooled LNG, which can be delivered to the markets of Europe, the Middle East and Asia by tanker without infrastructure constraints.

Speaking to reporters at the launch of a new gas well in Urengoi in the Arctic region, Medvedev admitted the company's exports to Europe might be less than the 154 billion cubic metres (bcm) it has projected.

"We said that exports will total 154 (bcm this year) but even if it is 150 bcm, revenues won't be lower," he said. Earlier a Gazprom's official said the company will increase its gas production next winter. Shtokman's gas reserves are estimated at 3.9 trillion cubic metres (tcm), enough to meet a year's global consumption and making it potentially the world's tenth largest field. In theory, gas from the field is due to be piped to Europe via the Nord Stream pipeline - launched last November - from 2016 and shipped as more costly liquefied natural gas from 2017.

But its development has been fraught with problems and last month its operating consortium deferred for the third time since March 2011 a final decision on whether to press ahead with initial investments of around $30 billion.

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(Originally published April 15, 2012, in Oil & Gas News.)