Gazprom pipelines and export capacity

Газопроводы Газпрома и экспортные мощности

Gas pipelines of West Siberia

Газопроводы Западной Сибири

Export flows of Gazprom

Экспортные потоки

Spot, Gazprom, Brent

Цены на нефть и газ

End-use price of gas

Russia and USA

Daily gas production

Суточная добыча


Comments on the Program of Russia's Gas Sector Development to 2030


Are the South Stream project and Caspian Gas Pipeline abandoned? (with additional comments of Nov-1-2008)

Export plans of Gazprom can be fulfilled without the South Stream project. Gazprom's program of Russia's gas sector development to 2030 forecasts the following volumes of pipeline gas exported to Europe (including Turkey but excluding the Baltic states).

Table 1. Gas Exports by Pipeline, bcm

  

2015

2020

2025

2030

European countries, including Turkey
219-222

220-225

220-227

220-227

Source: Program, p. 2-14.

Please note that the combined capacity of existing export pipelines and the Nord Stream project exceeds the forecasted export flows.

Table 2. Capacity of European Export Routes of Gazprom

 Gas export route via

Estimated capacity, bcm/year

 Moderate

 Maximum

 Ukraine

124

142

 Belarus
31

35

 Blue Stream
16

16

 Finland

6

7

 Nord Stream

55

55

 Total:

232

255

Sources: Gazprom, NAK Naftogaz.

Despite the complicated relations of Gazprom and Ukraine, this year the Ukrainian gas transit to Europe will reach the record level of 123-125 bcm. Transit volumes can be increased by another 19 bcm/year by the construction of relatively inexpensive Bogorodchany-Uzhgorod pipeline. It looks like the $20-billion South Stream project was planned for political rather than economic reasons.

Section 2.4 of the program says that in the long term, Central Asia is most likely to supply 70 bcm/year of gas to the pipeline system of Gazprom (see page 2-20). According to the official gas balance, in 2007 Gazprom received 60 bcm of Central Asian gas, including about 8 bcm from the Karachaganak gas field in Kazakhstan. Gazprom-KazMunaiGaz agreement foresees the future supplies of the Karachaganak gas at 16 bcm/year. So the Karachaganak gas alone is to raise the input of Central Asian gas to 68 bcm/year. It indicates that the program does not foresee the construction of Caspian Gas Pipeline. Apparently, the plan assumes just a minor upgrade of the existing Central Asia-Center pipelines.

In general, the exclusion of the least profitable projects of Gazprom could be good news for both investors and importers of Russian gas. Having enough pipeline capacity in Ukraine, the construction of the South Stream pipeline does not make sense. With the Caspian Gas Pipeline, Gazprom has to carry substantial financial costs, while the profits from resale of Turkmen gas are questionable. The recent sharp increase of the cost of capital proves that Gazprom was right in its moderate assumptions.

Mikhail Korchemkin, managing director

October 31, 2008

Additional comments - November 1, 2008

  1. The program sends a clear signal to Ukraine. The completion of the South Stream pipeline means a permanent loss of revenue from the transit of 30 bcm/year of Russian gas to Europe. This message will complicate the process of getting permission to build the pipeline in the continental shelf of Ukraine.

  2. The program gives another proof that Gazprom's management considers political goals of the Kremlin more important than the profits of shareholders.

  1. Gazprom may need the Caspian gas pipeline to compensate for the off-take by the Kazakhstan-China pipeline or to feed the latter pipeline (map source - website of Gazprom). In this case China's participation in the Caspian pipeline project would be logical. The Beineu-Alexandrov Gai section of the Caspian pipeline may not be needed.


Last modified: 12/07/14                    East European Gas Analysis 2006-2014                                           Email: info@eegas.com
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