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


Nord Stream versus Langeled


Cost of the Nord Stream pipeline is surprisingly high

In October 2006, Hydro commissioned the Langeled pipeline that brings gas from the Ormen Lange gas field in the North Sea to Easington in the United Kingdom. The official opening of Ormen Lange is scheduled for October 6, 2007. Remarkably, Phase 1 of the development, involving the Langeled gas pipeline, the land-based process plant at Nyhamna and offshore installations on the Ormen Lange gas field itself, was completed within the total budget of NOK 50 billion (in 2003 Norwegian krone terms - Source: Hydro). It equals to EUR 6.2 billion or USD 7.1 billion in the money of 2003. The Ormen Lange field is expected to reach plateau production of 25 bcm/year in 2010.

Langeled Gas Export System

Source: Norsk Hydro

 

 Nord Stream Pipeline

Source: Nord Stream

The Langeled Gas Export System is an ideal project to compare with the Nord Stream pipeline.  The table below shows key technical specifications and costs of both projects. Note that the first sections of the Langeled pipeline, from Nyhamna to Sleipner, are made of 42-in pipe and have design pressure of 250 / 215 bar and capacity of 80 mmcm/day. From Sleipner to Easington it is made of 44-in pipe and have design pressure of 156.8 bar and capacity of 74 mmcm/day.

Table 1. Comparison of Nord Stream and Langeled Pipeline Projects

 Specifications
    Nord Stream  

       Langeled

 Pipeline length
1198 km 1200 km
 Diameter
48 in
42-44 in
 Pressure 220 bar 157 to 250 bar
 Reported steel pipe requirements (one line) 1.10 mill. tons 0.85 mill. tons
 Maximum sea depth 210 m 360 m
 Annual capacity (one line) 27.5 bcm/year 25.0 bcm/year
 Daily capacity (one line) 88 mmcm/d (1) 74-80 mmcm/d
 Cost of the first line (in 2007 euros) ~EUR 4.0 bn (1) EUR 2.5 bn

(1) Estimated

Sources: Ormen Lange: Facts & Figures; Langeled Gas Export; Nord Stream: Facts & Figures

The comparison should consider the price index for construction materials and services. The Langeled construction contracts were signed at a good time when the price of steel pipe was lower and the number of offshore pipeline projects was very limited. Nord Stream is being planned at the time of shortage of offshore and onshore construction teams and at a higher price of steel pipe.

It is worth noting that the Langeled pipeline was completed NOK 3 billion below the budget (Source: Hydro). This is very unlikely to happen to the Nord Stream pipeline. Recent cost performance of Gazprom leaves little doubt that the project would seriously exceed its budget. Monopolies never have a reason to cut costs and usually have a very good one to raise them.

Mikhail Korchemkin, Managing Director

September 26, 2007 (Clarification of the Nord Stream cost - December 5, 2007)


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