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


Gazprom reduces pipeline rehabilitation works


Gazprom has canceled over 100 tenders for rehabilitation works at pipelines, compressor stations, pipeline river crossings and gas storage facilities. In the last decade, the Russian gas monopoly has significantly improved the reliability of its pipeline system. The number of pipeline failures in 2012 was nearly three times lower than in 2002-2003. The lack of proper investment can reverse the trend.

Apparently, Gazprom is trying to generate enough cash for the multibillion South Stream project. The company never borrows money for the construction of pipelines inside Russia because Gazprom executives do not want to attract banks' attention to the cost of Russian projects.

Notably, South Stream is designed to divert the export flows from a relatively inexpensive route through Ukraine to the most expensive one via the Black Sea. Therefore the project will cut the shareholders' profits and reduce the competitiveness of Russian gas in Europe. It turns out that the price of South Stream  may also include a lower reliability of Russian gas pipeline system.

Mikhail Korchemkin

East European Gas Analysis

Malvern, PA, USA

 

November 27, 2013

 

UPDATE:

According to Russian business-daily Vedomosti, Corporate Costs Department of Gazprom complains that there are too many tender applications from inexperienced small companies offering "dumping prices". Gazprom prefers the rehabilitations works to be done only by four dedicated companies - Stroygazmontazh, Stroytransgaz, Gazprom Tsentrremont and Salavatneftehimstroy. Apparently, the named contractors never offer their services at "dumping price".

 

December 1, 2013

 

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Reproduction or use of materials is allowed only with reference to East European Gas Analysis or www.eegas.com