Wood in Gazprom pipeline coup

WOOD Group, the Scottish oil services company, has won a "multimillionpound" deal from Russian giant Gazprom for work in the Shtokman field – one of the world’s biggest natural gas projects.
Aberdeenbased Wood, through its pipeline subsidiary JP Kenny, is to provide engineering design and will manage the engineering of a 600 kilometre pipeline.

Constructed in several stages, the pipeline will carry gas from the Barents Sea to Murmansk in Northern Russia.

Shtokman is a key development in Russia’s plans to become an energy superpower, with peak production of more than 70 billion cubic metres of gas a year. Shtokman is believed to hold reserves of at least 3.7 trillion cubic metres of gas and 31 million tonnes of gas condensate.

Originally Russia planned to export the gas by ship to the US, but the growing demand, both domestically and throughout Europe, prompted a review of the plans.

Gazprom, which is running the project with minority partners Total of France and Statoil Hydro of Norway, now intends the gas to form the resource base for exports through the Nord Stream gas pipeline.

The pipeline, which will run from Russia to Germany under the Baltic Sea, is expected come into use in 2010.

Extraction of the Shtokman field reserves will test the limits of current subsea technology.

The field, in the Russian controlled area of the Barents Sea, above the Arctic Circle, was discovered in 1988, but becasue of the hostile conditions is only now coming close to development.

It is more than 550 kilometres from land, below 350 metres of water, in seas prone to icebergs weighing up to a million tonnes and iceflows of up to 1 metre a second.

The appointment is a coup for Wood Group, with Moscowcontrolled Gazprom promising to appoint only "authoritative" international contractors for the project.

JP Kenny managing director Gerwyn Williams said the project added to the company’s strong portfolio of cold region engineering projects

"As the industry moves into deeper water and more remote environments, we can apply our subsea engineering capabilities to help our clients commercialise the breakthrough technologies needed to economically develop these new discoveries," Williams said yesterday.

The project will be managed by engineers in London and Norway, but JP Kenny said the company would also establish a new office in St Petersburg, home to Gazprom’s headquarters.

Wood Group, which is on the verge of entering the FTSE 100 after joining the reserve list in the latest reshuffle, rose 3p to 383p yesterday.