By Ryan Skinner (email)
Never heard of Yamal? You're not alone. Neither had I until today. And no wonder - even in the micro-lect language of the six and a half people who live there the name translates to "end of the world". OK, I jest. It has more than 6.5 residents. There's also a 37,000 year old mammoth calf - it's what's for dinner.
So we'd all be pretty shocked if Yamal ended up sparking off the next world war, wouldn't we? Hyperbole? Sure, but follow me for a sec.
Yamal is home to Russia's largest natural gas reserves, with 5.9 trillion cubic meters, according to Gazprom's web-site. The Shtokman find in the Barents Sea, by comparison, was estimated at 3.8 trillion cubic meters by Gazprom in 2007. The question of which of these will be developed and how each will be developed is one of significant geopolitical proportions.
Europe's gaz-lust is news to no one. StatoilHydro and Total fell to their knees to win a share in the Shtokman development, as Gazprom sought help to develop the tricky Arctic project. Aside from its sheer size, Shtokman's planned LNG export is popular for another reason: Secure supply. LNG trains are far harder to turn off than a pipeline.
A recent article by Barents Observer sows doubt about the Russian government's willingness to develop Shtokman alongside Yamal. The latter is the kind of land-based project Gazprom knows better, and it has been putting vast sums into pipeline infrastructure to bring this gas to market via the land route. Construction of the remaining 1100 kilometers kicked off just in time for the recession, on 3 December 2008.
Yamal can also be developed with LNG export. An Upstream Online article last year reported that Gazprom had considered such an option with Shell only to ditch it on grounds of the difficulty exporting the LNG through the Arctic ice.
This export hurdle may soon vanish, though. An ice-breaking LNG tanker that can operate year-round in the Barents is already on the drawing board, and - once a 20 MW electric propulsion system can be designed to power it - may soon entice the kinds of shipyards already building ice-going vessels. The Russians are using ships like these to move oil through the same icy seas today.
If Russia starts turning to Western partners for investment help, these partners may want to see their new investments funding the more secure LNG projects, rather than pipelines. Thus, as we see this struggle play out (how to develop Russia's far north resources), we just might see some ugly new moves in the global game of energy chess.
World War III? Perhaps not. Even if we are talking about the end of the world.