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


Pipeline construction costs go up when Gazprom works alone


Pipeline construction costs of Gazprom are much higher when the company works without foreign partners or without bank loans. Reported and projected costs at the three offshore pipeline projects of Gazprom illustrate this phenomenon.

Table 1. Specs of offshore pipeline projects, per 1 line

Project

Cap, bcm/y

D, mm

Cost, M/km

Foreign partner

Nord Stream

27.50

1153

3.4

Yes

South Stream

15.75

813

2.7

Yes

Dzhubga-Sochi

3.80

530

>5.0

No

Source: Gazprom

A comparison of pipeline construction costs at similar projects inside and outside of Russia is also very interesting. Note that in Russia, Gazprom builds its pipelines without foreign partners or bank loans.

Table 2. Construction costs of comparable pipeline projects

Pipeline name

Project, country

D, mm

Cost, M/km

Southern Corridor

South Stream, Russia

1400

7.41

Gryazovets-Vyborg-1

Nord Stream, Russia

1400

4.9

Gryazovets-Vyborg-22

Nord Stream, Russia

1400

3.5

Gazelle

Nord Stream, Czech

1400

2.4

NEL

Nord Stream, Germany

1400

2.3

OPAL

Nord Stream, Germany

1400

2.1

1 Official estimation of Gazprom.

2 A system of loops.

Sources: Gazprom, Gazelle, NEL, OPAL.

Surprisingly, it is a way more expensive to lay a pipeline in the plains of Southern Russia than anywhere else in Europe. Moreover, the estimated cost of 1 km of Southern Corridor exceeds the one of the Alaska gas pipeline of about the same capacity.

Figure 1. Pipeline cost structure

 

It is hard to explain such a big difference between the project costs. The most logical explanation that comes to my mind is the high share of "the wages of wickedness" (2 Peter 2:15).

Mikhail Korchemkin

East European Gas Analysis

Malvern, PA, USA

 

April 2, 2014

 

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Last modified: 09/28/16                    East European Gas Analysis 2006-2015                                           Email: info@eegas.com
Reproduction or use of materials is allowed only with reference to East European Gas Analysis or www.eegas.com