Transcript Evaluating Present Construction Plans for New and Existing

Evaluating Present Construction Plans
for New and Existing Pipeline Routes
from Russia to Europe
Mikhail Korchemkin
East European Gas Analysis
• Current pipeline capacity and
gas flows by export terminal
• Project investment cost
comparison
• Delivery cost of Russian gas to
Europe for new and existing
export routes
E-mail: [email protected]
European Export Routes
Bypass
Gazprom’s Target: To Bypass Ukraine
FSU & Gazprom Pipeline Capacity, bcm/year
Western Part of the Pipeline System
Uzhgorod
• Orenburg-Uzhgorod = 56-in
• Urengoy-Uzhgorod = 56-in
• Yamburg-Uzhgorod = 56-in
• Dolina-Uzhgorod (2) = 40 & 48-in
• Komarne-Drozdovichi-Yaroslaw (2)
= 20 & 28-in
• Beregovo-Hungary (2) = 32 & 36-in
• Hust-Romania = 28-in
Izmail
• Ananyev-Izmail = 48-in
• Shebelinka-Izmail (2) = 28 & 40-in
Brest/Kondratki
• Kobrin-Brest = 40-in
• Nesvizh-Kondratki = 56-in
1999 Capacity / Flow, bcm/yr
7/3
115 / 103
22 / 17
Export Flow of Gazprom, mmcm/day
400
350
300
250
200
150
100
50
0
Jan-95
Jul-95
Jan-96
Jul-96
Jan-97
Jul-97
Jan-98
Jul-98
•In winter the export pipelines operate at the capacity
Ukrainian Gas Balance,
January 1999, mmcm/day
800
0
700
600
500
8
109
420
51
400
300
200
100
313
15
15
361
361
536
UKR to Europe
Consumption
RUS to CIS
RUS to Europe
Storage
Production
Import
0
Input
Delivery
Delivery
Normal
Normal
Cold
•In winter 1999/2000 Ukraine was siphoning up to 150 mmcm/day
•Gazprom has succeeded in minimizing the pressure drop
Pros & Cons of the Ukrainian transit
Pros
•
•
•
Cons
Ukraine has a well-developed
pipeline system, which is
linked with transit pipelines of
Eastern Europe
Huge underground storage
facilities in western Ukraine
can provide a stable winter
flow from Uzhgorod
•
– the route to Romania,
Bulgaria, Turkey and Greece
is sensitive to illegal offtakes of gas
•
Spare capacity at the Russian
-Ukrainian border helps to
manage the winter peaks
Ukraine is the most expensive
transit ground for Gazprom
– other countries take 10%of
transit volume versus 28% of
Ukraine
•
Russian legal catch forces
Gazprom to contract the
stolen gas afterwards
Ukraine is likely to continue
the siphoning of Russian gas
– domestic market is too big
compared with other transit
countries
– Ukrainian new pipeline
project is aimed to siphoning
Storage facilities in western Ukraine help to
provide a stable winter flow from Uzhgorod
Gazprom adds gas to maintain pressure at
the Isakcha terminal at the Romanian border
Pipeline Investment Comparison: Three
Routes to Germany (~30 bcm/year)
Via Ukraine ~$4.2bn
• Longer route with mountains
• Yelets-Uzhgorod ~$2.5bn
• Uzhgorod-Germany ~$1.7bn
Via Belarus ~$4.0bn
• Torzhok-Kondratki ~$1.8bn
• Polish section ~$1.4bn
• German lines ~$0.8bn
NGG ~$4.0bn
• Off-Shore line ~$3.0bn
• Gryazovets-St.Pete ~$1.0bn
Transit Costs
• Ukraine charges $1.09/mcm
per 100 km, which is paid by
gas at $50/mcm
• The Ukrainian cost equals
to 28% of transit flow or
$13.70/mcm
• Slovak & Czech transit is
paid by gas at 10% of transit
flow (~$7.00/mcm)
• Belarussian cost is
estimated at $6.30/mcm
• Polish cost is estimated at
under $6.00/mcm
Average Delivery Cost of Gas in Germany
60
50
40
$/mcm 30
20
10
0
E-European transit
FSU transit
Transmission Russia
Production
1999
2000
Average Delivery Cost of Gas in Germany
60
50
40
$/mcm 30
20
$52.40
10
0
E-European transit
FSU transit
Transmission Russia
Production
1999
6.40
13.00
29.50
3.50
2000
Average Delivery Cost of Gas in Germany
60
50
40
$/mcm 30
20
$52.40
$57.20
10
0
E-European transit
FSU transit
Transmission Russia
Production
1999
2000
6.40
13.00
29.50
3.50
7.00
12.90
32.80
4.50
Delivery Cost: Ukraine vs Belarus
60
50
40
$/mcm 30
20
10
0
E-European transit
FSU transit
Transmission Russia
Production
Via Ukraine
Via Belarus
Delivery Cost: Ukraine vs Belarus
60
50
40
$/mcm 30
20
$58.00
$49.60
10
0
E-European transit
FSU transit
Transmission Russia
Production
Including the capital cost
Via Ukraine
Via Belarus
7.00
13.70
32.80
4.50
6.00
6.30
32.80
4.50
Production & Transmission Costs
Peculiarities of Reporting
• Production costs are reported
low to minimize royalties and
“mineral tax” payments
– these specific production taxes
are based on revenue
– internal sales by producers to
transmission companies of
Gazprom are performed at cost
– “social costs” and loans’
interest are allocated to the
transmission
– low value of production assets
(unlike pipelines) results in low
depreciation costs
Gazprom’s CEO Rem
Vyakhirev
• This justifies a high TPA tariff
($0.80/mcm per 100km - export)
Belarus-Poland-Germany Line Opened
Who’s Troubles are over?
• Another country got access
to free Russian gas?