Map from Clarkson Research presentation shows that Russian oil exports must move via ice-affected ports.

NEW ENERGY KLONDIKE?

Some estimates predict that one third of Russia's oil exports, or 150 million tonnes per annum--equal to Norway's current production--will go through the Barents Sea by around 2015. And Barents Sea reserves, many of them in areas where boundaries between Russia and Norway are unclear, may contain as many as 12 billion barrels of oil. The oil and gas reserves combined may be worth twice that of Norway's existing oil fund, according to calculations by Statoil that were obtained by Norwegian newspaper Aftenposten. Signs are good that Norway and Russia will cooperate to exploit the Barents hydrocarbon wealth. Last month Prime Minister Kjell Magne Bondevik got a warm welcome in Moscow from Russian President Vladimir Putin. "There are very good prospects for oil and gas cooperation between Norway and Russia," Putin said, after praising Norwegian offshore technology. Aftenposten reports that agreements to pursue cooperation in the energy sector were later signed at a meeting that included Russian Prime Minister Mikhail Fradkov and the head of the Russian energy company Gazprom. Putin attended his meeting with the Norwegian premier armed with a map of the Barents Sea--including the Shtokman Field.

SHTOKMAN FIELD

The Shtokman field reportedly has enough gas to fuel all of North America for almost four years and is key to Gazprom's plans to supply liquefied natural gas to the U.S., the world's largest energy consumer.

On June 28, French oil giant Total said it had signed a Memorandum of Understanding with Gazprom for the development of the Shtokman field.

Total said the MOU covers studies in the upstream sector as well as the development of liquefied natural gas production and marketing. Total described itself as "a natural partner for the Shtokman project with already well advanced technical studies and with an already strong experience in developing giant liquefied natural gas projects, as well as project financing. Total said signature of the MOU signified its "continuing strategy to invest in further developing Russia's oil and gas reserves."

Total is unlikely to be Gazprom's sole partner in developing Shtokman, for example Statoil, Sempra and ConocoPhillips have offered part of their U.S. LNG terminals to Gazprom.

Right now, in fact, Gazprom seems to be talking to everyone. Gazprom chief Alexei Miller was in London in early July and, even as terrorist bombs were exploding, was in talks with Shell, with a visit to BP next on the agenda.

A partnership with Statoil is logical because of the lessons the Norwegian company has learned from the development of its Snohnit field, the first offshore project in the Barents Sea. Gas from Snohvit will be pipelined to an LNG plant on Melkoya Island at the heart of which is a barge mounted reliquefaction plant due to come on stream in 2006.

Gazprom is Russia's monopoly exporter of gas, but has ambitions to become a far larger player on the world. It recently sold 10.74% of its stock to the Russian state, making the state its majority shareholder. It has plans for using the payments received from the state for a variety of projects--including buying projects from Russian oil giant Rosneft. The projects targeted include the Sakhalin-1, Sakhalin-2 and Sakhalin-3 projects in the Russian Far East.