Crimea to get Russian gas

Gazprom is ready to build a pipeline to Crimea. Two options are currently under consideration – to lay a pipeline either from Anapa or from Krasnodar. The cost of the project is in the range from $200-300 million up to $1 billion, reports daily newspaper Vedomosti.

The first option involves the construction of a 400-kilometer pipeline from Krasnodar to Sevastopol. The pipeline could have a capacity of up to 10 billion cubic meters per year, and cost up to $1 billion, according to a spokesperson for the Russian Ministry of Energy. However, there is a cheaper option, i.e., from Anapa (the starting point of the offshore section of the South Stream pipeline). In this case, the pipeline length would not exceed 100 km, and its cost would be $200-300 million. Such a branch can be constructed from the Russkaya Compressor Station (being built by Arkady Rotenberg’s company Stroygazmontazh) or from the Kazachya Station (being constructed by Gennady Timchenko’s Stroytransgaz).

The project cannot be implemented quickly, warns Mikhail Korchemkin, Director of East European Gas Analysis. The expert predicts that it will take at least two years. “And even this term will require working in a rush, when you consider the previous experience of Gazprom, including the experience of the Sochi gas pipeline,” says Mr. Korchemkin. Numerous procedures must be performed, such as the development of the project design, the planning of the route, obtaining environmental impact assessment, and many other things, says Mr. Korchemkin.

“The issue of gas supply to the Crimea requires a quick solution, and hence this means the pipeline construction project,” says Valery Nesterov, an analyst for Sberbank CIB. However, he is discouraged by the fact that Crimea, contrary to previous statements, cannot provide itself with gas. It has therefore been decided to provide the peninsula with gas from external gas sources, i.e., from Russia. “It is difficult to judge the economics of this project. However, today it is obvious that political expediency dominates, in order to create conditions for the normal functioning of the economy of the peninsula,” said Mr. Nesterov. “Apparently, [the issue of] Crimea’s gas self-sufficiency has been postponed to sometime in the future,” he said.

Full text is available on the website of Vedomosti.

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