Arm & Rijk

1. Shtokman – the most risky project in ArcticaNina Lesikhina

2. 650 km from the coast 3.6 trillion m3 gas 35 mln ton – condensate Shtokman gas condensate field

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

4. Key-player: Shtokman Development?

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

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

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 – 920 000 ton annually, 2008 – 1.5 mln ton

9. Huge investments Investments to the shelf development in 2008-2020 – 612.7 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 • 2008 - preparing of the ground for LNG plant • 2011 - drilling • 2011 – building of the modules for LNG plant • 2012 – building of sub-sea pipeline • 2013 – first gas by pipeline • 2014 – first LNG • 2014-2016 – building of on-land pipeline

12. 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” …and!

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

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

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. 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. Bellona demands

20. Thank you for your attention!