Giant reserves

In a statement, Alexei Miller, Gazprom's chief executive, said Total will receive 25 per cent of a joint company that will develop the project's first phase, while one or more other foreign companies may share an additional 24 per cent.

Gazprom will retain at least 51 per cent of the company, plus total ownership of the development license and "all of the extracted hydrocarbons", he said.

The Shtokman field, located in the Russian area of the Barents Sea above the Arctic Circle, is one of the world's few known giant gas reserves yet to be tapped.

Miller said the project's first phase will extract 23.7bn cubic metres of gas for pipeline shipment starting in 2013, and shipment in liquid form by 2014.

Advanced discussions

"It confirms a trend we're seeing where Russia is doing joint venture deals with a number of European concerns but not with the Americans."

Al Breach,
head of reaserch at UBS Warburg
A Total spokesman in Paris confirmed news of the agreement, saying the company was "in very advanced discussions" with Gazprom over the details of the partnership.

Shtokman's future came under a cloud in October when Gazprom made a surprise announcement that it had rejected its entire short-list of potential foreign partners in the project.

Chevron and ConocoPhillips from the United States, Total and Norway's Hydro and Statoil were told that Gazprom would develop the field alone.

However, analysts said the massive costs and technical challenges of the deep-sea field would make it nearly impossible for Gazprom to do so.

The company later softened its stance, saying foreign companies could participate as private contractors, but that it would maintain full ownership of the field.

US shut out

Russia and the EU have clashed repeatedly over energy supplies, with European officials warning against increasing reliance on Russian gas and Gazprom's expansion plans in Europe.

Moscow has threatened to form a gas cartel to increase its leverage in negotiations.

Al Breach, head of research for investment bank UBS Warburg, called the deal "a major victory" for France and all of Europe.

Gazprom initially said Shtokman gas would be shipped to the United States in liquefied form, but later said it would be shipped to Europe via a planned Russian-German pipeline that will run under the Baltic Sea.

Breach said: "I think critically it looks like this is going to be European partners, but not Americans.

"It confirms a trend we're seeing where Russia is doing joint venture deals with a number of European concerns but not with the Americans."