Gazprom is tightening the purse strings on the stalled Shtokman project as it revealed a substantial cut in its investment budget for this year, according to a report.
The Russian gas giant is allocating a modest $7 million in this year’s budget for the planned Barents Sea gas field development, where a final investment decision is pending, the Barents Observer reported, quoting Russian-language website www.Oilru.com.
That sum will be spent by subsidiary and licence holder Gazprom Dobycha Shelf, while an additional $22 million is reportedly earmarked for the Shtokman Development consortium, in which Statoil and Total are partners.
A final investment decision on the first phase of the giant project – now estimated to cost more than $20 billion – has been postponed until at least 1 April as the foreign partners hold out for tax breaks from the Russian government that they claim are necessary to make it commercially viable.
Gazprom is reining in spending this year with planned investments totaling 777 billion roubles ($25.7 billion), compared with a record 1227 trillion roubles in 2011, although it is expected to again raise investments to new heights in 2013 and 2014.
The company may yet boost its cash allocation for Shtokman if required in its half-year revision of the investment plan.
Gazprom said it expects to pay an additional 440 billion roubles in taxes over the next three years as a result of the government’s decision to raise the mineral extraction tax for the company.
Last year, the government imposed a higher mineral extraction tax on Gazprom in attempt to balance the federal budget while boosting spending ahead of Russia’s presidential election to be held in March.
Meanwhile, the state gas monopoly is proceeding with its plans in other parts of the Arctic and intends to spend about 30% of this year’s budget in the Yamal Peninsula, where the Bovanenkovo field is in the final development phase.