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MOSCOW (Reuters) - Russia's Gazprom (GAZP.MM) and its partners will try to revitalise plans to develop one of the world's largest gas finds with the unveiling in June of a new scheme that is likely to see the Arctic giant's riches shipped abroad as super-cooled liquefied gas.
Sources in the Russian government, gas industry and the consortium formed to develop the Shtokman field said the partners will likely abandon plans to pipe half the gas to Europe and instead sell LNG to a wider global market in the radical revamp of the project.
The St Petersburg International Economic Forum in June, where Vladimir Putin is expected to give a keynote speech, will be the venue for the Shtokman consortium to announce a new approach to developing the field, where operating conditions feature 27-metre-high waves and vast shifting icebergs.
The emergence of a viable project to develop Shtokman's 3.9 trillion cubic metres of gas - more than the reserves of gas-rich neighbour Norway's entire continental shelf - would end nearly two decades of false starts with two different groups of investors.
It would also be a second chance in about as many months for Putin, who is in his final weeks as prime minister before his May 7 inauguration as president, to show he can secure the vast investments needed to sustain Russia's vital energy industry.
Last week Russian state oil company Rosneft (ROSN.MM) and ExxonMobil (XOM.N) finalised a landmark venture which could ultimately invest $500 billion in Russian offshore zones, including development of its oil and gas prospects to the east of Shtokman in the Kara Sea.
The biggest foe of the Barents Sea gas project as it stands now is shale gas. Since the founding of the consortium the mass production of gas from shale in the United States has savaged prices there for liquefied gas.
As a result Putin met the partners last month and held out the prospect of additional tax holidays, deemed necessary by the foreign partners to make the project viable.
His government, concerned in particular about falling oil output, approved a sweeping package of fiscal incentives for capital-intensive projects in Russia's inhospitable Arctic zones earlier this month.
The partners, who include Norway's Statoil (STL.OL) and Total (TOTF.PA) of France, are considering whether to abandon a plan to pipe half Shtokman's gas to Europe in favour of liquefied natural gas (LNG), the sources said.
"We haven't made a final decision on this proposal of Gazprom yet," a consortium source said. "One element of the decision is to see how much of a redesign we have to do."
But several sources said the consortium had cancelled all construction tenders while the technical parameters are undergoing revision, potentially setting back gas production from the current planned launch in 2016.
"At the moment the technical configuration of the project doesn't suit any of the shareholders, so they are not prepared to take a final investment decision," another source in the consortium said.
"They could sign (agreements on) new technical solutions and a new configuration for the project at the St. Petersburg forum. After that it could be a year before a final investment decision is taken. They need time to call new tenders and find new contractors."
A decision to pursue an LNG-only project would put flesh on Putin's orders to Gazprom to focus on super-cooled liquefied natural gas, which, unlike the pipeline gas exports which provide Gazprom with the bulk of its revenue, can be shipped by tanker to the highest bidder.
Putin highlighted Shtokman last month in a broadside against Gazprom as he called on the company to wean itself off pipeline exports to Europe.
Additional reporting by Dmitry Zhdannikov; Writing by Melissa Akin; Editing by Greg Mahlich