Rossiyskaya Gazeta: Nord Stream: is the UK extension good for Gazprom?
In June, Gazprom announced initial plans to extend the Nord Stream gas pipeline; in October, it concluded in a preliminary study that the proposed Nord Stream extension was economically and technically feasible.
The project would see the construction of two new lines, one going straight to the United Kingdom with a total annual capacity of 27.5 billion cubic metres (bcm).
Gazprom’s CEO Alexei Miller has confirmed the interest of the company’s UK partners in the project, and has hinted that a memorandum of understanding could be signed by January 31, 2013. The cost of the UK extension is estimated to be $16-$20bn (£10bn-£12.5bn).
However, according to BP’s Statistical Review of World Energy, overall gas consumption in the UK has fallen steadily in recent years. In 2011, it was 80bcm, down 15pc from the previous year, and down sharply from the previous decade’s average of 94bcm.
Preliminary data indicates an even larger decline in demand this year as a result of weak economic activity and, more interestingly, an increase of consumption of coal rather than gas. Falling consumption has, of course, led to a rapid drop in domestic gas production.
However, the demand for gas imports is rising, reaching around 53bcm gross, 35bcm net in 2011. And it is likely that EU regulation and UK government policy will restrict the use of coal in power generation, which should increase demand for gas. If liquefied natural gas is bid away to other parts of the world, that too would increase the need for importing pipeline gas. MORE