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    Gazprom Provides New Cost Estimate for South Stream

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Summary

Gazprom has stated the South Stream pipeline across the Black Sea to Europe may cost about Eur 15.5 billion.The offshore part of the link may cost 10...

by: C_Ladd

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South Stream Pipeline, Natural Gas & LNG News,

Gazprom Provides New Cost Estimate for South Stream

Gazprom has stated the South Stream pipeline across the Black Sea to Europe may cost about Eur 15.5 billion.

The offshore part of the link may cost 10 billion euros at current prices, while the onshore section in Europe may cost 5.5 billion euros, Russia’s natural-gas export monopoly, said in an excerpt from its corporate magazine, published today on its website.

According to the Vedomosti, South Stream could emerge as Russian gas giant Gazprom's most expensive project.

Estimates of the cost of the project have varied widely. In February 2009, Gazprom said that the 3000km route could be worth more than Eur 24 billion.  Later, the company's CEO Alexei Miller said that capital spending on the project would be Eur 8.6 billion. Earlier this month, project head Marcel Kramer said the total cost was likely to be more than Eur 10 billion. Previously, South Stream partner Eni SpA had previously evaluated the entire project cost at around Eur 19 billion.

Gazprom and Eni plan to build a 900-kilometer pipeline across the Black Sea and extend it to southern and central Europe to deliver Russian gas, bypassing transit states such as Ukraine. Russian gas flows to Europe were interrupted at least twice during freezing weather over the last five years because of pricing and debt disputes with Ukraine.

An investment decision on the project may be made in mid- April, Gazprom said.

Gazprom plans to build four lines across the sea, all of which will bypass Ukraine’s exclusive economic zone, Leonid Chugunov, head of Gazprom’s project management department, said in an interview with the corporate magazine.

Bulgaria will probably be the first country to host the onshore section of South Stream while one or two lines of the pipeline may reach the neighboring Romanian coast, Chugunov said. From Bulgaria, the pipeline’s main route will run to Serbia, Hungary, Slovenia, Austria and southern Italy, he said. Offshoots to Macedonia, Croatia, Hungary, Greece and Turkey may also be built.