Nord Stream Route Four Times More Expensive than Route Via Ukraine

In 2012, Nord Stream shipped 11.8 bcm of gas from Vyborg, Russia, to Greifswald, Germany. According to Gazprom, this volume was diverted from the "old" export route via Ukraine and Slovakia.

From Greifswald, Russian gas was transported by the OPAL pipeline to Brandov at the Czech border and then by the Gazelle pipeline to Waidhaus at the Czech-German border. The following table compares the transportation costs at the new route via the Nord Stream pipeline and the old one via Ukraine.

Russian Gas Exports to Waidhaus, Germany: Cost Comparison, EUR Million

1 Assuming there were no Nord Stream and its feeding pipelines.
2 A part of gas transportation expenses associated with Nord Stream and its feeding pipelines.
3 Depreciation cost of corresponding segment of the Ukhta-Torzhok pipeline.
4 Depreciation cost.
5 Ship-or-pay cost based on the booked capacity of the corresponding year.
6 Revenue from sales of additional fuel gas for Ukrainian compressor stations.

Sources: Gazprom, EUSTREAM, NET4GAS, Naftogaz of Ukraine, EEGA.

The case "without NS" assumes that Nord Stream and its feeding pipelines were not built. Note that the table considers only depreciation costs at the Russian pipelines that feed Nord Stream.

In 2012, the Nord Stream route to Waidhaus was four times more expensive than the old route via Ukraine. The Nord Stream route will remain more expensive even after the expiration of ship-or-pay transit contracts of Gazprom with Slovakian EUSTREAM and Czech NET4GAS.

Our thanks to Mikhail Korchemkin. Mikhail is the founder and executive director of East European Gas Analysis (EEGA) is a Pennsylvania-based consulting firm founded in January 1995 and one of the leading experts in cost-benefit and financial analysis of production and pipeline projects in natural gas sector of Russia and the former Soviet Union (FSU).