Bloomberg: Gazprom Linking East, West Gas Pipes Seen Economically Unviable

Russia’s plan to connect natural gas pipelines to Europe with those to Asia may be uneconomic because of the distances involved, according to Bloomberg Industries and East European Gas Analysis.

Transporting the fuel via pipeline is “often uneconomic” beyond 3,000 kilometers (1,800 miles), Elchin Mammadov and Philipp Chladek, analysts at Bloomberg Industries, said today. The link would boost OAO Gazprom’s spending and may increase fuel costs for European utilities including EON SE and Edison SpA, which will have to compete with China for the Russian fuel.

Gazprom has shipped fuel to Europe for decades and plans the South Stream link to the region. Last week it agreed with China National Petroleum Corp. to supply gas for 30 years via a yet-to-be built pipeline that would form part of its Eastern Gas Program. The deal marks the start of competition between Europe and Asia for Russian gas, Gazprom Chief Executive Officer Alexey Miller said at the time.
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