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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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Analysis or www.eegas.com
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