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 risks losing its most profitable market - Ukraine


Ukraine can stop importing Russian gas

"Naftogaz of Ukraine" is the biggest corporate importer of Russian gas. The combination of high price and no costs of international transit has made Ukraine the most profitable market of Gazprom. However, the current plan of Gazprom is likely to result in losing this jewel market to the competitors.

The pipeline construction plan assumes the total replacement of Ukrainian transit flows by deliveries via the Nord Stream and South Stream pipelines. In my view, this strategy misses a very important point - the possibility of switching the existing gas pipelines of Eastern Europe for the reversal flow. This inexpensive operation will allow Ukraine receiving gas from Nabucco via the Baumgarten-Uzhgorod pipeline, the projected LNG terminals in Trieste, Croatia, Poland, Germany and many other sources. 

Table 1. Exports of Russian Gas to Europe and Turkey in 2017, bcm

European exports by destination:

Plan of Gazprom

Nord Stream-2

Nord Stream-1

Ukraine (1)

-

63

91

Belarus

35

35

35

Finland

6

6

6

Blue Stream

16

16

16

Nord Stream (2)

55

55

27

South Stream (2)

63

-

-

Total pipeline exports:

175

175

175

Deliveries to Ukraine:

 

 

 

Russia and via Russian territory

-

25

38

Other sources

40

15

2

(1) Excluding transit to Moldova.

(2) Full load is required for the commercial viability of the bypassing pipelines.

The two bypassing pipelines with the total investment cost of over $40 billion (excluding the pipeline construction costs in Russia) can save Gazprom $3-4 billion of annual transit costs in Ukraine. This is just one side of the story. In my view, Gazprom also needs to evaluate the risk of losing its most profitable market that generates at least $10-12 billion of annual revenue.

Mikhail Korchemkin

March 3, 2010

Malvern, Pennsylvania, USA


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