Putin Courts Foreigners in Yamal

Prime Minister Vladimir Putin courted Western energy companies on a trip to Yamal on Thursday, but said local contractors would have to get their fair share of any development in the Arctic treasure-trove of gas.

Putin spoke with the chiefs of 10 Western energy majors, including ConocoPhillips and Total, and praised their technology before they attended a government meeting on the development of the Yamal Peninsula’s gas resources.

“Our foreign partners can listen attentively to what we discuss … and over the course of further work they can also decide on their possible participation,” Putin said during the government meeting in the city of Salekhard.

Many of the companies are already engaged in joint projects in Russia. Gazprom has been looking for partners to develop the challenging Yamal fields, which are touted as replacements for the firm’s depleting active deposits. It also plans to build a plant in Yamal to liquefy natural gas, or chill it into liquid form to transport by tankers.

“We are ready to broaden our cooperation, and that’s why we invited you here,” Putin said. “We want you to feel like you are members of our team.”

The government is ready to accommodate the interests of foreign energy investors, he said without elaborating.

But he was much clearer about what the government’s terms would be for such investors.

In any joint projects, Russia must get “real” access to new foreign technology, Putin said. In addition, local plants would have to get “extensive” contracts for high-tech equipment, he said.

“I think it’s natural and understandable to everyone,” Putin said.

In one of the most recent joint projects, Gazprom appeared to set a model for dealing with foreign investors. In joining forces with France’s Total and Norway’s StatoilHydro to develop the giant offshore Shtokman field in the Barents Sea, it retained control of the venture and the field’s license. Russia’s Vyborg Shipyard began building drilling rigs for the project in July 2008.

It remains to be seen whether the Shtokman model will be acceptable to other Western companies, said Andrew Neff, an energy analyst at IHS Global Insight in Washington.

Before the government session, Putin showed off Yamal’s gas riches to the foreign visitors during a separate meeting in a building that holds the databank of the region’s natural resources.

“I must say, you didn’t waste your time coming all the way out here, one might say, to the edge of the world,” Putin said. “The place where we are is absolutely unique.”

The Yamal-Nenets Autonomous District accounts for 90 percent of all gas produced in Russia, yet its peninsula’s reserves of 12 trillion cubic meters remain largely untapped, Putin said.

Russia’s call for foreign capital comes amid hard times for Gazprom, which had to scale back its investment budget for this year as its sales and revenues slumped.

“I think it’s a reflection of the economic reality,” Neff said. “There’s realization that Gazprom does not have the money to put into long-term investment in these circumstances.”