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Murmansk seeks new way out of gas deadlock

Aleksey Miller again talks gas with Murmansk Oblast.

Two years after Gazprom abandoned the Shtokman project, Murmansk again approaches Gazprom for a stronger energy cooperation.

Location

In a meeting with Gazprom President Aleksey Miller last week, Governor Kovtun highlighted the Arctic region’s growing need for natural gas, either supplied as LNG or by pipelines. Several major industrial companies are considering new plant facilities in the Kola Peninsula and would like gas as energy source, Kovtun said, adding that her region ultimately could need 7,62 billion cubic meter per year, a press release from the governor’s office reads.

That could make the construction of a gas pipeline to the region economically viable, the governor believes.

Murmansk was long planned to become Gazprom’s Arctic gas infrastructure hub and the gigantic Shtokman field in the nearby Barents Sea was one of the company’s flagship projects. However, the Shtokman project stranded following mounting development costs and plummeting gas prices. Originally, half of the Shtokman gas was to be pipelined through the Kola Peninsula to the Baltic Sea, while the remaining gas was to be sold as LNG. The project was also to gasificate industry and households in Murmansk Oblast.

In 2012, Gazprom announced that it had decided to postpone the project ”until better times”, and consequently dealt a major blow to the region’s gas plans.

Murmansk today remains highly dependent on expensive and polluting heavy oil (mazut) for regional heating.

Following the Shtokman-failure, Murmansk started to look for alternative energy companies partners. As previously reported, Rosneft is today about to become a key regional player both with regard to the development of the Murmansk Transport Hub, regional port and terminal facilities, as well as in regional shipbuilding.

However, even without the Shtokman project, Gazprom remains a major player in Murmansk. Through its subsidiary TGK-1, the company controls the regional hydropower plants, as well as the Murmansk Thermal Power plant, consequently accounting for a key share of the region’s heating energy and electricity needs