Gazprom plans to spend Rub 510 Billion (€12.5 Bn, $17.0 Bn) on its
Southern Corridor project designed to supply gas to the South Stream
pipeline. The Southern Corridor will be fed via
Bovanenkovo-Ukhta-Pochinki pipeline route, a part of the
compressor station is the end point of the Ukhta-Pochinki pipeline and the
start point of the Southern Corridor.
Based on the officially published project costs, the cost of the
Bovanenkovo-Pochinki link can be estimated at Rub 750 Billion (€18.5 Bn,
$25.0 Bn) at the lowest. Gazprom prefers to consider this investment
as a part of the overall system expense. This way about two-thirds
of the capital expenses can be allocated to the cost of supply of
Russian consumers, which would make it easier to lobby for higher
price of gas in Russia. However, without the South Stream
pipeline, both the Southern Corridor and the Bovanenkovo-Ukhta-Pochinki
projects are not needed. Note that having the South Stream
project, Gazprom could deliver the required volumes of gas to
Pochinki via a short link from Bovanenkovo to Yamburg and the
existing pipelines of West Siberia.
Therefore, the total cost of the South Stream project with its
feeding pipelines and the financing expenses is to exceed €50
Billion or $65 Billion. Out of the total, about €40 Billion ($52
Bn) will be paid by Gazprom and the rest by its foreign partners.
Notably, this investment will increase the gas transmission
costs and reduce profits of the shareholders of Gazprom.
The map in PDF format can
be downloaded from here.
Same as with other Russian pipelines
built after 2005, cost estimates for 1 km of Southern
Corridor are 2-2.5 times higher than for similar pipelines in the
European Union. The table below compares construction costs
(including compressor stations) for selected 56-in pipelines.
| Southern Corridor
High cost of the Southern Corridor
pipelines can not be explained by climatic, geographic or
terrain conditions of Southern European Russia.
East European Gas
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