By Matthew Hulbert, Contributor
8/29/2012
It’s been coming for a long time, but Gazprom has finally canned its 3.9tcm Shtokman gas development in the Barents Sea. France’s Total and Norway’s Statoil can breathe a collective sigh of relief as Gazprom’s triumvirate partners, ducking out of an increasingly expensive $20bn Arctic development. But as far as Russian Inc. is concerned, this is a strategic shocker. Far from dictating global LNG dynamics as the ‘swing producer’, Moscow is going to be kicked from pillar to post trying to set prices in Europe, and far more importantly, in Asia. That applies not only to liquid molecules, but pipeline gas as well. The reality of this hasn’t fully dawned on President Putin yet. When it does, expect the Kremlin to go for the quickest political fix it has to hand: The 63bcm South Stream pipeline specifically designed to stitch up South East European markets as the target of choice. Pathetic politics, but a sure sign of where Russia’s limited regional ambitions now rest.
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