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People see
this, for some reason, as bypassing other countries, but it is not at all about
bypassing any other country, rather, it is simply about establishing an
additional route to transport energy resources to Europe.
Vladimir Putin
(on the Nord Stream project), June 4, 2007
The table below gives some basic
numbers of the Caspian Gas Pipeline and Nabucco project.
|
Pipeline Section |
Estimated length, km |
Importer |
Estimated gas price, $/mcm |
|
Turkmenbashi - Russian
border |
1390 |
Russia |
$161 |
|
Turkmenbashi - Turkish
border |
920 |
Turkey |
$300 |
|
Turkmenbashi - Bulgarian
border (via Russia) |
3200 |
Bulgaria |
$300 |
|
Turkmenbashi - Bulgarian
border (via Nabucco) |
2625 |
Bulgaria |
$300 |
|
Turkmenbashi-Baumgarten,
Austria (via Russia) |
3700 |
Austria |
$300 |
|
Turkmenbashi-Baumgarten,
Austria (via Nabucco) |
3700 |
Austria |
$300 |
Russia is the worst gas transit
country in Europe. Only Gazprom and Rosukrenergo are allowed to ship gas through
the Russian territory. Note that Gazprom buys all Turkmen, Uzbek and Kazakh gas
and sells it either to its fully owned subsidiary
ZMB (Schweiz) AG or to Rosukrenergo
(50% owned by Gazprom, 45% by Mr. D.Firtash and 5% by Mr.D.Fursin). Other
companies can buy Central Asian gas only through the named brokers. The brokers'
service can be very expensive. For instance, ZMB buys gas at Turkmen border at
$100/mcm and sells it at the border of Georgia at $235/mcm, while the official
cost of transit is less than $30/mcm. Rosukrenergo
re-exports Turkmen gas to Europe at $300/mcm.
Without free transit through Russia,
the maximum current price of Turkmen gas at the Russian border can not exceed
$161 per 1000 cubic meters (mcm). It is calculated as the price of Russian gas
exported to Ukraine net of export duty: $230 - (30% x $230) = $161.
It is unclear why Turkmenistan would
prefer building a new 1390-km pipeline to Russia instead of a 920-km link to
Turkey. The price of gas in Turkey is nearly twice higher than the maximum
possible price in Russia. By 2011, the price of gas in Russia is expected to
become equal to the netback European price (European border price less cost of
Ukrainian transit less export duty). Nevertheless, the difference of over 30%
(export duty plus Ukrainian transit cost) between the price in Russia and Europe
will remain higher than the Nabucco transit tariff. In our view, Russian gas
export duties are very likely to be raised and very unlikely to be reduced.
Nabucco means a shorter
transportation distance from Turkmenbashi to Bulgaria, Greece, Romania and
Serbia. The distance to Baumgarten (Austria) is about the same in both projects.
As a matter of fact, Nabucco can be
the least investment-costly option for exporting additional 10 bcm/yr of gas by
Gazprom. It would also mean the further diversification of export flows of
Gazprom.
Caspian Gas Pipeline would work fine
if Turkmenistan and other Central Asian states were able to export all gas to
Ukraine and Europe without any brokers. Gas pipelines running through Russia
must have the same status as gas pipelines crossing Kazakhstan, Ukraine,
Georgia, Slovakia or any other country that provides transit of gas for a
reasonable transparent tariff. Without the freedom of transit in Russia,
the Caspian Gas Pipeline is unlikely to be built.
Mikhail Korchemkin, May 20,
2007
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