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Russian gas major Gazprom reviews its export projects

October 07, 2015, 21:27 UTC+3 MOSCOW
The company has reduced the project capacity of Turkish Stream natural gas pipeline to the benefit of the 3rd and 4th lines of Nord Stream, its Chief Executive Officer Alexey Miller said
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© ITAR-TASS/Marina Lystseva

MOSCOW, October 7. /TASS/. Russian gas major Gazprom is reviewing its projects on gas export to the European Union (EU). The company has reduced the project capacity of Turkish Stream natural gas pipeline to the benefit of the 3rd and 4th lines of Nord Stream (Nord Stream 2 project), its Chief Executive Officer Alexey Miller said at a gas forum in St. Petersburg. Gazprom also does not rule out shifting Turkish Stream project for a year, and is preparing tenders on Nord Stream 2 project.

North prior to south

The virtual capacity of Turkish Stream pipeline will total 32 bln cubic meters of gas instead of the earlier planned 63 bln cubic meters. Gazprom CEO said construction of only 2 lines of the pipeline is now being discussed. According to Miller, Turkish Stream capacity has been reduced due to construction of Nord Stream pipeline.

"The decision is related to the agreements with our European partners on construction of Nord Stream-2," he said. "In this regard we took a look at total gas needs of the European market, at streaming charts and now we see that it is not necessary to build a gas pipeline with the capacity of more than 32 billion cubic meters a year in the southern direction. These are two lines," Miller said.

No time crunch

Gazprom still hopes to enhance talks on Turkish Stream with government of Turkey though the company does not rule out the timeline of the project’s implementation may be shifted. Gazprom CEO said the text of the Russia-Turkey intergovernmental agreement on the 1st line of the pipeline is ready while the 2nd line is now being negotiated.

Nevertheless, the company does not consider shifting of the timeline of the project’s implementation for a year as a serious problem.

"It’s no big deal if it /the project - TASS/ is shifted for a year," Gazprom Deputy Chairman Alexander Medvedev said, adding that the date of the intergovernmental agreement’s signing does not depend on Gazprom.

"Formation of the government /of Turkey/ will take some time and it’s difficult to fix upon," he added. On October 6, Miller said the project faces no political risks.

All proceeding as planned

Implementation of Nord Stream 2 project, which stipulates construction of 2 lines of the pipeline with total annual capacity of 55 bln cubic meters from Russia to Germany across the Baltic Sea in addition to 2 lines already in operation, is going within the schedule, Alexander Medvedev said. The company is already preparing a pipeline tender and plans to hold a tender among pipe-layers.

"We are within the schedule. We are preparing a pipeline tender. Next year we will hold a tender among pipe-layers," he said.

The technical concept of Nord Stream 2 will be similar to that of Nord Stream 1, Gazprom CEO said earlier. The project does not fall within the European regulation as gas will be supplied to European companies solving the problem of the Third Energy package limitations.

New market challenges

In a move to meet new market challenges Gazprom is developing mechanism of exporting gas at auctions. Alexey Miller said the company plans to hold its second auction for gas exports in December of 2015 /first auction was held in September 2015, 1.23 bln cubic meters of gas were sold for 250 mln euro - TASS/.

Miller also did not rule out that future auctions will include gas volumes with expiring contracts. "As of now we are thinking about additional volumes, although we also think about the volume with contracts that will expire soon," Miller said.

Gazprom will increase gas offer at auctions in 2016 to 6 bln cubic meters. Also, the company plans to expand the geography of gas supplies. According to Alexander Medvedev, Gazprom will hold a gas auction in January-February of 2016 for the delivery starting from April 2016 through March 2017.

"We will hold an auction in January-February. We will offer greater volumes than we did this year. The time of delivery will be increased possibly up to a year - from April 2016 through March 2017," Medvedev said.

He added that the company does not plan to decrease gas supplies to Europe.

"Export volumes are substantially higher - 159-160 bln cubic meters versus 146.3 bln cubic meters," he said. According to Medvedev, Q2-Q3 supplies "are substantially higher.".

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