Ukrainian Gas Transport System Costlier Than South Stream

CEO of Russian gas giant Gazprom Alexey Miller has told Russian Prime Minister Vladimir Putin that the cost of Ukraine's gas transport system may be greater than constructing the South Stream pipeline.

Mr. Miller estimated the cost of the Ukrainian transport system at around $20 billion (USD), while the South Stream project is estimated to cost $16.5 billion, with $10 billion of this spent on offshore construction and the remaining $6.5 billion to be spent on onshore construction. Additionally, Mr. Miller said, between $2-3 to 7-8 billion will be required to pay for necessary upgrades to the Ukrainian gas transport system.

He told the prime minister that the quoted figures came from Ukraine.

"They have quoted a substantial sum – $20 billion," he said. "Its size is due to the fact that the network’s modernisation will also be quite expensive. Today we can only talk about tentative estimates. We must establish how much this modernisation will cost. Different figures are being quoted – from two to three billion euros to seven or eight billion... It is important to realise that upgrading it will also require considerable expenditures."

He also told the minister that a proposed repricing of gas supply from Gazprom to Ukraine would cost the company an estimated $9 billion per year.

Talks between Ukraine and Gazprom will continue in January following the end of time off for the New Year.