pipelines and export capacity
Газопроводы Газпрома и экспортные мощности
Gas pipelines of West Siberia
Газопроводы Западной Сибири
Export flows of Gazprom
Spot, Gazprom, Brent
Цены на нефть и
End-use price of gas
Russia and USA
Daily gas production
Russian Gas Insight - 2006-1
"With adequate profit, capital is very bold. A
certain 100 percent will make it ready to trample all human laws."
Karl Marx, Capital
Russian Gas Insight
is an annual multi-client report that analyzes volumes, costs
and benefits of all operations with natural gas that gets into the pipeline
system of Russian gas monopoly Gazprom.
Russian Gas Insight gives our
evaluations of security of supplies of Russian gas to different markets in
the former Soviet Union and Europe.
At this stage, Russian Gas Insight
does not cover future LNG projects that are or will be designed to operate
separately from the existing pipelines (like Shtokman). LNG terminals supplied
via Gazprom pipelines are included into the study.
Russian gas business has entered an exciting
period of rapid and sometimes unexpected change.
For instance, the transit
conflict with Ukraine has resulted in an immediate increase of cost of gas
delivered to Europe by $15 per thousand cubic meters (mcm).
In October 2006 Gazprom has changed its
plans for the development of Shtokman field in the Barents Sea.
A change of this scale can
affect potential investor’s decision on participation in a gas production
project in Russia.
We expect many changes to take place in Gazprom
and in Russian gas business in the coming two or three years.
There are predictable
changes, such as introduction of new transit tariffs for third parties (the
linear tariff that depends on transportation distance will be replaced by a more
complicated formula), new gas pricing system in Russia (load factor will be
added to the currently used distance factor), separation of gas storage from the
transportation business segment of Gazprom, and some other.
changes may be caused by an excessive growth of operating costs of Gazprom, drop
in oil price or a successful lawsuit against Gazprom.
Transit agreement with Ukraine is very
likely to be reconsidered this year.
Our clients know in advance what
are the likely effects of all important changes in the Russian gas
Every report has a section covering gas
business environment in Russia. It has updates on gas prices, external
costs (labor, materials and supplies), taxation and general observations.
Section on volumetric analysis gives updates
on volumes of gas produced, transported and sold to different markets. It also
has analysis of annual and maximum daily flows in all important sections of
Gazprom pipelines and presents forecast on location and size of future
Section on cost analysis will have the most
important information on the cost of gas in any place of the pipeline system of
Gazprom and beyond – from cost of gas at producer gate to cost of gas delivered
to Russia, all export terminals (Vyborg/Primorsk, Kondratki, Uzhgorod, Orlovka
and other) and gas metering stations in Europe (Waidhaus, Frankfurt, etc).
Every report has comments on financial
statements of Gazprom.
Every report has one or two sections focusing
on most important problems of gas business in Russia.
This issue includes section focusing on
Ukrainian gas transit.
In the next issue we plan
to investigate the capacity of Gazprom pipelines in West Siberia.
calculations indicate that after completion of the new SRTO-Torzhok pipeline and
upgrade of existing West Siberian pipelines, there will be enough capacity to
accommodate all gas from West Siberia including all production from Yamal
Construction of pipelines from Yamal to Yamburg would be a way more
cost-efficient solution than the expensive new pipeline system from Yamal to
Ukhta and Torzhok (though steel pipe brokers may think different).
volumes transported via Gazprom pipelines in January 2006 also disclosed the
actual pipeline capacity.
We will use the January 2006 data in our analysis.
In one of the coming issues, we plan to
investigate effects of outage of major transmission pipelines on
security of gas supplies to different markets. We will consider
different locations of major export pipelines.
We plan to publish Base Case (most likely case)
and Best Case scenarios. The latter will show steps to be taken to provide
maximum increase of shareholders value.
We are open to suggestions from our subscribers.
If you have questions about the way we calculate particular parameters or if you
can recommend a different approach, we will be happy to receive your comments.
Feedback from our subscribers is highly appreciated.
Gazprom is a company with great potential for
According to our estimations, Gazprom can increase its cash flow by
over $1.5 billion a year at absolutely no cost.
From 2004, Gazprom could have generated
over $1.5 billion of additional profits for its shareholders by avoiding
payments of export duties on cost of gas transit out of Russia.
Currently Gazprom goes the way of Standard Oil of
Gazprom strengthens its monopolistic position in Russia and expands
it to other states of the FSU.
We believe it would take much shorter time than
in case of Standard Oil to turn the development in gas sector of Russia the
Eventually, Russia will join WTO and will ratify the Energy
Charter Treaty. These also are predictable changes with important consequences.
Russian Gas Insight
is a unique source of information that is very important for decision makers
on all sides of the gas business.
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