TERIBERKA, Russia, April 22 (Reuters) - Villagers in Teriberka thought they had struck it lucky when Gazprom (GAZP.MM) declared the Arctic Russian village its first onshore transit point for gas from the massive Shtokman field.
The village, which shared the fate of many Arctic settlements after the fall of the Soviet Union, had seen its population shrink fivefold since the collapse of its once-thriving fishing industry.
Now, its hopes are jeopardised by falling world gas demand and competition from other sources. The United States last year surpassed Russia as the world's largest gas producer for the first time since 2001.
"I do not believe in Shtokman any more. I heard talk about it back in the 1980s. It did not happen then, and it is even less likely to happen now," Valery Yarantsev, the communist mayor of Teriberka, told Reuters.
"You can throw billions at it, but it will not work."
Shtokman, discovered in 1988, is one of the largest untapped gas fields in the world, with estimated reserves of 3.8 trillion cubic metres of natural gas. It is located beneath the Barents Sea, about 550 km (345 miles) from Teriberka.
The village was also picked to host a gas liquefaction plant that would allow fuel from Shtokman to be cooled into liquid form and shipped by tanker to the U.S. market. In response to rising gas demand in the boom years that preceded the global economic crisis, Gazprom invited France's Total (TOTF.PA) and Norway's Statoil (STL.OL) to a consortium that aimed to invest $15 billion to pump the first gas by 2013.
But Gazprom said in March the partners were delaying the start of the project by three years. Pipeline gas production will start in 2016, rather than 2013. Liquefied natural gas output (LNG) is set to begin in 2017 instead of 2014.
European gas demand has fallen sharply since the consortium was formed, and a boom in North American shale gas output has cast doubt over export demand for Shtokman's output and the financial viability of such a technically challenging project.
UNSUITABLE FOR LIVING Except for the consortium's small representative office, there is little evidence of these ambitious plans being on track in or around Teriberka, set on the banks of a picturesque bay that once hosted a bustling fishing port and a fish processing factory.
Empty buildings scarred by deep cracks stand, their windows boarded up, on unpaved streets. Dozens of unused fishing boats rusting onshore.
Yarantsev said that, of the 52 buildings still populated in the village, 39 have officially been confirmed as unsuitable for living.
A former fishing vessel captain, he became a local hero when in 2004 he escaped the Norwegian coast guard after being caught fishing in disputed water with the wrong equipment. Backed by the Communist Party, he was elected mayor last year.
Most of Teriberka's residents, numbering about 1,500, back their mayor, who officially introduced a state of emergency last year. Only 300 people in the village have jobs and there has been no running hot water since the mid-1990s.
"Gas may start flowing, but it will be no good for us. Our village will slowly die, just as it has been dying in recent years," said Alexei, 59, a former fisherman who declined to be identified by his last name.
"They just want to finish us all off so that we don't stand in the way of their projects."
The village is about 120 km (75 miles) east of the regional capital, Murmansk. The last 40 km of road to the village are a potholed washboard.
"They promised us mountains of gold, but I no longer believe in it," said Lyudmila, a saleswoman in a small grocery shop, as four of her customers sat sipping beers and chatting. She said jobs would go to newcomers and not villagers.
Yarantsev said the village would have been better off fishing, as it did throughout its 500-year history, but complained that excessive regulation and corruption in Russia put the profession out of reach for small-time fishermen. The woes of the fishing industry, one of the most criminalised sectors of the Russian economy, has struck small coastal villages like Teriberka, where people cannot afford to buy fishing quotas or pay bribes to officials.
Fishermen from Teriberka must land their catch in Murmansk and negotiate time-consuming bureaucratic hurdles before taking their fish home. The fish sometimes rot before they can be sold.
"You sail into Murmansk these days as though to an enemy port," said Yarantsev. Prime Minister Vladimir Putin came to Murmansk on April 17 to hold a meeting on the fishing industry as part of a series of sectoral meetings he has chaired in various parts of the country. He also promised to start work on Shtokman next year.
"He should have come here instead. I would have shown him to what he has brought this country," said Yarantsev. "We want him to come to places like this, not to those Potemkin villages where he cuts ribbons."