Gazprom puts cost of Turkish Stream at €13.6 billion

The Turkish Stream will be a gas pipeline through the Black Sea to the European part of Turkey, and then to the border with Greece. Source: Alexei Kudenko / RIA Novosti

The Turkish Stream will be a gas pipeline through the Black Sea to the European part of Turkey, and then to the border with Greece. Source: Alexei Kudenko / RIA Novosti

Gas giant says Turkish Stream is 1.5 times cheaper than South Stream project.

The cost of the four-line pipeline will amount to  €11.4 billion ($12.6 billion) without VAT, with the cost of the first line estimated at €4.3 billion ($4.7 billion), Alexey Serebryakov of Gazprom's department for project management announced Aug. 10, RIA Novosti reported.

Experts estimate costs including VAT will be €13.6 billion ($15.1 billion).

The natural gas giant officially revealed the cost of the Turkish Stream for the first time since scrapping the South Stream project in December 2014. The figures reveal that the Turkish Stream will be one and a half times less expensive than the ditched project. The cost of the South Stream – which was supposed to have the same capacity of 63 billion cubic meters – was estimated at €23.5 billion ($26 billion).

According to analysts, the valuation of the Turkish Stream project is accurate and Gazprom should find the money for it. But the figures remain estimates at this stage as the project duration remains unclear, the final number of lines is still unknown, and agreements with contractors are not yet signed.

“A lot depends on how the construction works goes; if it is delayed, the project cost will increase,” says Maria Belova of Vygon Consulting. She also suggests that the cost of pipes (about €1 billion; $1.1 billion), bought a year ago for the first line (of what was then the South Stream), is most likely not included in the current assessment.

Valery Nesterov of Sberbank Investment Research assumes that the value of the first line includes Gazprom's losses over the terminated contract with Saipem (the South Stream’s contractor). “The company will be able to cope with this project even without project funding, especially given the phased construction,” he said.

The Turkish Stream is a gas pipeline through the Black Sea to the European part of Turkey, and then to the border with Greece. The design is not yet completed. The length of the offshore part amounts to around 565 miles, with the onshore section on Turkish territory planned to be 110 miles.

Four lines with an annual capacity of 15.75 million cubic meters of gas each were planned; the first line serve Turkish needs, and the rest for the transit of gas to the EU.

 

Combined report based on materials from Kommersant and RIA Novosti.

All rights reserved by Rossiyskaya Gazeta.

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