Russian Gazprom is developing the vast Shtokman gas field in the Barents Sea together with the French Total and the Norwegian Statoil. The objective of this research was to identify, in the light of the Shtokman project, the political risks that foreign investors may face in the Russian gas industry. The theoretical framework of the research was created based on several models about political risk, and the empirical data of the study was gathered by interviewing eight experts from Finland, France, Norway and Russia.
According to the findings of the study, changes in the Russian top leadership, the development of Russia’s international relations, and the future of the global gas markets are among the main factors affecting the level of political risk in the Shtokman project. The foreign investors’ bargaining power against Gazprom and the relations between the investors’ home countries and Russia are significant factors as well.
Moreover, project-specific issues, such as the initial contractual relationship, affect the project’s risk level. Nationalisation and forced contract renegotiation were concluded to be rather unlikely scenarios as in this case, Russia remains in control of the field’s resources, and the foreign investors are only involved in the field’s development. In fact, one of the key questions at the moment is the foreign companies’ compensation for developing the Shtokman field. After the project’s first phase, i. e. 25 years after the production has begun, the ownership of the field’s infrastructure will be transferred to Gazprom. Half of the project’s costs are to be paid already during the first phase, whereas the field’s peak production is to be reached only during the following phases. Furthermore, the project contains significant risks as the political and the economic situation in the Russian gas industry may change considerably during the project’s implementation.
However, the final decision to implement the field has not been made yet, and the current estimates for the production to start in 20162017 seem to be unrealistic. The project’s future depends on the development of the Yamal gas fields, on the future of the global gas business, and on the partners’ cooperation in the project. Because of these uncertainties, the most essential question remains open is the challenging Shtokman project going to materialise in the foreseeable future?