engineering institutions, including the corresponding divisions of
Gazprom, give realistic estimations of pipeline construction costs,
comparable with these of western projects. However, it looks like
on the way to the top management of Gazprom, these cost estimations
get at least tripled.
The phenomenon of
multifold growth of investment costs can be illustrated by the
"Altay" project and the Gryazovets-Vyborg pipeline. Gazprom has
published cost estimations for the two 56-in pipeline projects
In early 2006,
website put the total cost of the 2800-km gas pipeline from West
Siberia to China (the
Altay project) at $4.5-5.0 billion, including the cost of
compressor stations (CS).
its press release, in 2006, Gazprom planned to spend RUR 19.84
billion for the construction of 144-km section of the
Gryazovets-Vyborg pipeline. The document covers the cost of the
first line, excluding CS. The second line construction has started
Construction Cost of 1
km of 56-in Gas Pipelines
(1) March-May 2006
estimation of Gazprom - including cost of CS;
Gazprom's press-release of November 23, 2005 - excluding cost of
(3) At the average
exchange rate of 2006.
Considering the CS
expense, the total cost of 1 km of the Gryazovets-Vyborg pipeline is
four times higher than that of the Altai pipeline. Note that in
2009, the cost of 1 km of
OPAL pipeline in Germany was estimated
at EUR 2.1 million (RUR 94 million or $3.0 million), including the
Here is another example.
In March 2008, before the economic crisis and at the peak prices of
materials and services,
Engineering" estimated the cost of the
gas pipeline at RUR 8-10 billion. In September 2009, when the
price of steel pipe and other materials was lower than before the
crisis, Gazprom's CEO
Alexey Miller put the cost of this pipeline at RUR 25 billion.
getting a realistic cost estimation, Gazprom executives add a
generous margin for contractors and brokers, so the total project
cost gets 3-4 times higher.
East European Gas
November 24, 2010
Malvern, PA, USA