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Gazprom could be able to build Turkish Stream using project financing

February 28, 7:10 UTC+3 MOSCOW

The Russian authorities announced the Turkish Stream in December 2014 to replace the South Stream gas pipeline project

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© Valery Sharifulin/TASS

MOSCOW, February 28. /TASS/. Gazprom is confident in the possibility of the construction project of Turkish Stream gas pipeline under the terms of project financing, according to Member of Gazprom Management Committee Oleg Aksyutin.

"All the conditions for the implementation Turkish Stream under the terms of project financing are available," Aksyutin said.

The Russian authorities announced the Turkish Stream in December 2014 to replace the South Stream gas pipeline project. It was planned that the offshore section of the Turkish Stream gas pipeline would comprise four stretches with a capacity of 15.75 billion cubic meters each.

However, the negotiations on the project were subsequently suspended, including due to the crisis in bilateral relations. After talks held between Turkish President Tayyip Erdogan and Russian leader Vladimir Putin in St. Petersburg in August 2016, a decision was made to resume the project, set up a working group and prepare a roadmap.

The project’s total cost is estimated at 11.4 bln euro. It is planned that Gazprom’s investment in the Turkish Stream project in 2017 will amount to 41.92 bln rubles ($700 mln) against 23.507 bln rubles ($392 mln) last year. 

The oil budget 

Gazprom has a conservative approach to budget planning for 2017, having included oil price of $48 per barrel and the price of gas at $166 per 1,000 cubic meters, according to Deputy Chairman of Gazprom Management Committee Andrey Kruglov.

"We adhere to a conservative approach, in the budget we have included prices of oil and gas below current levels - $48 per barrel and $166 per 1,000 cubic meters, respectively," Kruglov said.

According to Deputy Chairman of Gazprom Management Committee Alexander Medvedev, Gazprom in 2017 expects growth of average price of gas exports to Europe to $180-190 per 1,000 cubic meters from $167 in 2016.

"Average price in 2016 was $167 per 1,000 cubic meters. Talking about the expected price in the current year, we must not forget that now our contract portfolio contains various pricing systems ... Therefore, forecasting oil price for2017 is not as easy as it was before. The price range in 2017, depending on the spot market price dynamics will be from $180-190 per 1,000 cubic meters," Medvedev said.

Medvedev added, "Weighted average price of supplies to the CIS and Baltic countries amounted to $152 per 1,000 cubic meters in 2016".

It was reported earlier that Gazprom targeted the average gas export price of $199 per 1,000 cubic meters in the corporate budget for 2016. The stress scenario relied on the price of $151 per 1,000 cubic meters. The average price was $234 per 1,000 cubic meters in 2015.

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