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


Caspian Gas Pipeline and Nabucco Project (click here for UPDATED information)


People see this, for some reason, as bypassing other countries, but it is not at all about bypassing any other country, rather, it is simply about establishing an additional route to transport energy resources to Europe.

Vladimir Putin (on the Nord Stream project), June 4, 2007

The table below gives some basic numbers of the Caspian Gas Pipeline and Nabucco project.

Pipeline Section

Estimated length, km

Importer

Estimated gas price, $/mcm

Turkmenbashi - Russian border

1390

Russia

$161

Turkmenbashi - Turkish border

920

Turkey

$300

Turkmenbashi - Bulgarian border (via Russia)

3200

Bulgaria

$300

Turkmenbashi - Bulgarian border (via Nabucco)

2625

Bulgaria

$300

Turkmenbashi-Baumgarten, Austria (via Russia)

3700

Austria

$300

Turkmenbashi-Baumgarten, Austria (via Nabucco)

3700

Austria

$300

Russia is the worst gas transit country in Europe. Only Gazprom and Rosukrenergo are allowed to ship gas through the Russian territory. Note that Gazprom buys all Turkmen, Uzbek and Kazakh gas and sells it either to its fully owned subsidiary ZMB (Schweiz) AG or to Rosukrenergo (50% owned by Gazprom, 45% by Mr. D.Firtash and 5% by Mr.D.Fursin). Other companies can buy Central Asian gas only through the named brokers. The brokers' service can be very expensive. For instance, ZMB buys gas at Turkmen border at $100/mcm and sells it at the border of Georgia at $235/mcm, while the official cost of transit is less than $30/mcm. Rosukrenergo re-exports Turkmen gas to Europe at $300/mcm.

Without free transit through Russia, the maximum current price of Turkmen gas at the Russian border can not exceed $161 per 1000 cubic meters (mcm). It is calculated as the price of Russian gas exported to Ukraine net of export duty: $230 - (30% x $230) = $161.

It is unclear why Turkmenistan would prefer building a new 1390-km pipeline to Russia instead of a 920-km link to Turkey. The price of gas in Turkey is nearly twice higher than the maximum possible price in Russia. By 2011, the price of gas in Russia is expected to become equal to the netback European price (European border price less cost of Ukrainian transit less export duty). Nevertheless, the difference of over 30% (export duty plus Ukrainian transit cost) between the price in Russia and Europe will remain higher than the Nabucco transit tariff. In our view, Russian gas export duties are very likely to be raised and very unlikely to be reduced.

Nabucco means a shorter transportation distance from Turkmenbashi to Bulgaria, Greece, Romania and Serbia. The distance to Baumgarten (Austria) is about the same in both projects.

As a matter of fact, Nabucco can be the least investment-costly option for exporting additional 10 bcm/yr of gas by Gazprom. It would also mean the further diversification of export flows of Gazprom.

Caspian Gas Pipeline would work fine if Turkmenistan and other Central Asian states were able to export all gas to Ukraine and Europe without any brokers. Gas pipelines running through Russia must have the same status as gas pipelines crossing Kazakhstan, Ukraine, Georgia, Slovakia or any other country that provides transit of gas for a reasonable  transparent tariff. Without the freedom of transit in Russia, the Caspian Gas Pipeline is unlikely to be built.

Mikhail Korchemkin, May 20, 2007

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Last modified: 12/07/14                    East European Gas Analysis 2006-2014                                           Email: info@eegas.com
Reproduction or use of materials is allowed only with reference to East European Gas Analysis or www.eegas.com