How much does it cost to think?
The real cost of ambitious gas projects is surely unknown
Grigory Pasko, journalist
On Lenta.Ru I read: «The cost of construction of the "Nord Stream" pipeline is measured at 7.4 billion euros, while that of "South stream" - up to 25 billion euros». I got to thinking about these numbers. And not only because one of the head employees of the company Nord Stream, Gerhard Schroeder, had cited the cost of Nord Stream at 9 bln euros ( while in the mass media there have been mentions of a number of even 12 bln euros), and his friend, Russian premier Putin, has named a cost of construction of the «South Stream» of 10 bln euros. (In so doing, Putin underscored : "And maybe, even less, considering the fall in construction materials prices.").
I will remind readers that South Stream is planned to go along the
bottom of the Black Sea from Novorossiysk (the «Beregovaya» compressor
station) to the Bulgarian port of Varna (thence - to Italy). The
underwater stretch of the gas pipeline will have a span of 900 km.
About «Nord stream» it is known that the underwater part will extend along the bottom of the Baltic for 1200 km. Overland - from Gryazovets (Vologda oblast) to Portovaya Bay (Vyborg rayon of Leningrad oblast) - another 917 km.
Even if we take into account that the sum of 25 bln euros includes also the laying of the pipeline from Varna to Alexandroupolis (Greece) and thence to Italy, still this is shorter in length than the Nord Stream route. That is, even in this case, the northern pipeline will be longer than the southern one by two times. How can something that is two times shorter cost two times more?
It goes without saying that I'm not an economist and I obviously don't understand something. But still: how can something like this be?
It is known that both projects - the northern Nord Stream and the southern South Stream - have alternatives. For example, completion of the second phase of the already-existing overland gas pipeline «Yamal -Europe» (through the territory of Byelorussia and Poland) will end up costing half as much as Nord Stream - at 2.5 bln euros. (This under the condition that the cost of Nord Stream truly is 7. 4 bln, and not a lot more, which is more likely even taking the crisis into account).
If we speak of «South stream», it too turns out to be more than three times more expensive than the alternative project "Nabucco", which the European Union is preparing to realize in conjunction with the Central Asian republics and Iran - the cost of «Nabucco» is 7.9 billion euros.
In principle, and proceeding from common sense, the financial world crisis ought to introduce its correctives to all these numbers. In the opinion of minister of foreign affairs of Poland Radosław Sikorski, it is precisely in consideration of the crisis that we ought to return to the idea of completing the «Yamal-Europe» pipeline. He noted recently that the most effective and cheapest way to diversify deliveries of gas to Europe is the construction of a second branch of the «Yamal - Europe» pipeline. By the way, earlier Byelorussia too had proposed building a «Yamal - Europe-2» pipeline to ensure reliable transit to Europe.
Instead of conclusions. Every gas project has, as a minimum, three components: the political, the economic, and the environmental. I will allow myself to express my firm belief that not a single one of these components has been resolved either with the Nord or with the South Stream. If the Nord Stream project is being supported by a series of European countries, this does not mean that the relations of Russia, for example, with the Baltic States, Byelorussia, Poland and Ukraine are going to be unclouded after this.
Russia's rushed decision to build a second branch of the «Blue Stream» (from Novorossiysk to Turkey) is also aroused not at all by economic considerations: the first branch, designed to pump 30 bln cubic meters of gas per year, passed barely 10 bln in all of the year 2008. That is, it is understandable that the second branch has been conceived to spite the «Nabucco» project.
It looks like the officially sounded estimated numbers for the cost of the gas projects also do not have anything in common with the real ones: they are nothing more than a continuation of the political under-the-carpet power games of various countries. Moreover, of all the countries, it is precisely Russia that is trying to run faster than everybody else - without pausing to take a look at rational solutions in the realm of politics and economics (about the environment we will keep silent for now), according to the principle: the main thing is to engage in the battle, we can always think later. But this has already been : the USSR clearly lost both the arms race and the «cold» war as a whole. The lessons of the past have not, it turns out, taught anything to those who have come out of the KGB, and who today run Russia.
About «Nord stream» it is known that the underwater part will extend along the bottom of the Baltic for 1200 km. Overland - from Gryazovets (Vologda oblast) to Portovaya Bay (Vyborg rayon of Leningrad oblast) - another 917 km.
Even if we take into account that the sum of 25 bln euros includes also the laying of the pipeline from Varna to Alexandroupolis (Greece) and thence to Italy, still this is shorter in length than the Nord Stream route. That is, even in this case, the northern pipeline will be longer than the southern one by two times. How can something that is two times shorter cost two times more?
It goes without saying that I'm not an economist and I obviously don't understand something. But still: how can something like this be?
It is known that both projects - the northern Nord Stream and the southern South Stream - have alternatives. For example, completion of the second phase of the already-existing overland gas pipeline «Yamal -Europe» (through the territory of Byelorussia and Poland) will end up costing half as much as Nord Stream - at 2.5 bln euros. (This under the condition that the cost of Nord Stream truly is 7. 4 bln, and not a lot more, which is more likely even taking the crisis into account).
If we speak of «South stream», it too turns out to be more than three times more expensive than the alternative project "Nabucco", which the European Union is preparing to realize in conjunction with the Central Asian republics and Iran - the cost of «Nabucco» is 7.9 billion euros.
In principle, and proceeding from common sense, the financial world crisis ought to introduce its correctives to all these numbers. In the opinion of minister of foreign affairs of Poland Radosław Sikorski, it is precisely in consideration of the crisis that we ought to return to the idea of completing the «Yamal-Europe» pipeline. He noted recently that the most effective and cheapest way to diversify deliveries of gas to Europe is the construction of a second branch of the «Yamal - Europe» pipeline. By the way, earlier Byelorussia too had proposed building a «Yamal - Europe-2» pipeline to ensure reliable transit to Europe.
Instead of conclusions. Every gas project has, as a minimum, three components: the political, the economic, and the environmental. I will allow myself to express my firm belief that not a single one of these components has been resolved either with the Nord or with the South Stream. If the Nord Stream project is being supported by a series of European countries, this does not mean that the relations of Russia, for example, with the Baltic States, Byelorussia, Poland and Ukraine are going to be unclouded after this.
Russia's rushed decision to build a second branch of the «Blue Stream» (from Novorossiysk to Turkey) is also aroused not at all by economic considerations: the first branch, designed to pump 30 bln cubic meters of gas per year, passed barely 10 bln in all of the year 2008. That is, it is understandable that the second branch has been conceived to spite the «Nabucco» project.
It looks like the officially sounded estimated numbers for the cost of the gas projects also do not have anything in common with the real ones: they are nothing more than a continuation of the political under-the-carpet power games of various countries. Moreover, of all the countries, it is precisely Russia that is trying to run faster than everybody else - without pausing to take a look at rational solutions in the realm of politics and economics (about the environment we will keep silent for now), according to the principle: the main thing is to engage in the battle, we can always think later. But this has already been : the USSR clearly lost both the arms race and the «cold» war as a whole. The lessons of the past have not, it turns out, taught anything to those who have come out of the KGB, and who today run Russia.
"How can something that is two times shorter cost two times more?"
Um, because the Black Sea is thousands of feet deep and the Baltic Sea is mostly hundreds of feet deep?
Geography not your strong suit, Grigory? One wonders what is.