october 7, 2004 gas pipeline system of gazprom the total length of gazprom pipelines is about...

October 7, 2004October 7, 2004 www.eegas.comwww.eegas.com 22

Gas Pipeline System of GazpromGas Pipeline System of Gazprom• The total length of The total length of

Gazprom pipelines is Gazprom pipelines is about 154,000 km, about 154,000 km, including:including:~ 54,000 km of 56”54,000 km of 56”

~ 25,000 of 48”25,000 of 48”

~ 16,000 of 40” pipelines16,000 of 40” pipelines

• The average age of The average age of pipelines is 22 yearspipelines is 22 years

• In 2003, the pipelines In 2003, the pipelines supplied 327 bcm to supplied 327 bcm to Russian consumers, 91 Russian consumers, 91 bcm to FSU and 140 bcm bcm to FSU and 140 bcm to Europeto Europe

18 x 56” lines

Source: www.gazprom.ru

Ave 2004 production cost - $0.24/mcf

European border delivery cost - $2.16/mcf, incl transit and taxes


Pipeline Breaks in 2000-2002Pipeline Breaks in 2000-2002

• Gazprom’s Gazprom’s pipeline break pipeline break rate is about 0.2 rate is about 0.2 per 1000 km, or per 1000 km, or ~30 per year~30 per year

• Worst case repair Worst case repair time (tundra, no time (tundra, no railroad, melting railroad, melting snow) is 72 snow) is 72 hours; it’s under hours; it’s under 30 hours in 30 hours in populated areaspopulated areas

• Pipeline system Pipeline system has a lot of has a lot of bypass capacity, bypass capacity, which minimizes which minimizes operational lossoperational loss


Existing Pipeline CapacityExisting Pipeline Capacity

• Gazprom has spare Gazprom has spare capacity along the capacity along the Central corridor from Central corridor from West Siberia through West Siberia through the Russian borderthe Russian border

• Eastern Urengoy Eastern Urengoy corridor and the North corridor and the North corridor are fully corridor are fully loadedloaded

• The size and timing of The size and timing of pipe demand of pipe demand of Gazprom and its FSU Gazprom and its FSU neighbors depend on neighbors depend on location and timing of location and timing of the future capacity the future capacity bottlenecksbottlenecks


Daily Flow Projections Is the KeyDaily Flow Projections Is the Key

• Pipeline capacity is defined Pipeline capacity is defined by the maximum daily flowby the maximum daily flow

• Russian gas flows have a Russian gas flows have a huge seasonal swinghuge seasonal swing– Winter peaks are partly Winter peaks are partly

shaved by storage shaved by storage withdrawalwithdrawal

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Total Uzhgorod Velke Kapusany

mmcm/day

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Pipeline input by Gazprom and independents

mmcm/day


• EEGA has developed a model EEGA has developed a model that calculates spare capacity that calculates spare capacity and capacity deficit in the FSU and capacity deficit in the FSU gas pipeline system through gas pipeline system through 2020 (by year and by section)2020 (by year and by section)

• The model uses reasonable The model uses reasonable gas market forecasts for gas market forecasts for Russia, FSU and EuropeRussia, FSU and Europe– EEGA makes projections of EEGA makes projections of

gas consumption in the gas consumption in the service area of Gazprom in service area of Gazprom in Russia by region and in FSURussia by region and in FSU

Daily Flows of GasDaily Flows of Gas

• The model calculates regional balances and maximum daily flows The model calculates regional balances and maximum daily flows from West to East and compares the flows with the existing pipeline from West to East and compares the flows with the existing pipeline capacitycapacity

• Finally, location and timing of new pipeline projects are identifiedFinally, location and timing of new pipeline projects are identified


New Pipeline ConstructionNew Pipeline Construction

1.1. Zapolyarnoe-Urengoy – Zapolyarnoe-Urengoy – 3x56”x200km – completed3x56”x200km – completed

2.2. Ukhta-Torzhok – 56”x 1324km Ukhta-Torzhok – 56”x 1324km – under construction– under construction

3.3. Torzhok-Smolensk – 56”x Torzhok-Smolensk – 56”x 324km (Russian section of 324km (Russian section of Yamal-Europe) – completedYamal-Europe) – completed

4.4. Yamal-Yamburg – 6x56”x Yamal-Yamburg – 6x56”x 520km – in about 2006-2017520km – in about 2006-2017

5.5. North European Pipeline – 42” North European Pipeline – 42” x1200km – in about 2011-2014x1200km – in about 2011-2014

6.6. Gryazovets-NEP – 56”x610km Gryazovets-NEP – 56”x610km – same timing as NEP– same timing as NEP

7.7. Turkmenistan-Russia – 56”x Turkmenistan-Russia – 56”x 1070km – in about 2012-20161070km – in about 2012-2016

8.8. Novopskov-Uzhgorod – 56”x Novopskov-Uzhgorod – 56”x 1420km – in about 2010-20141420km – in about 2010-2014

9.9. Bogorodchany-Uzhgorod – Bogorodchany-Uzhgorod – 56”x240km – in 2006-200856”x240km – in 2006-2008

10.10. Tula-Torzhok – 56”x540km – in about 2008-2011Tula-Torzhok – 56”x540km – in about 2008-2011

New Pipeline Projects Required New Pipeline Projects Required under Moderate Market Scenariounder Moderate Market Scenario


Upstream West SiberiaUpstream West Siberia• Nearly all independent Nearly all independent

producers are located producers are located along and east of the along and east of the Urengoy-Surgut-Urengoy-Surgut-Chelyabinsk pipelinesChelyabinsk pipelines– This section is fully This section is fully

loaded but there are loaded but there are options, like flow options, like flow reversal and “Siberian reversal and “Siberian Interconnector”Interconnector”

• Production decline at Production decline at Urengoy, Yamburg and Urengoy, Yamburg and other “old” fields will free other “old” fields will free up enough capacity for up enough capacity for the Yamal gasthe Yamal gas

• All Gazprom projections All Gazprom projections anticipate high gas anticipate high gas markets in Russia and markets in Russia and EuropeEurope

loaded

spare capacity of ~30 bcmy

loaded


West Siberian Pipeline InputWest Siberian Pipeline Input

• Gazprom has enough pipeline capacity to take all West Siberian gasGazprom has enough pipeline capacity to take all West Siberian gas

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Max capacity after upgrade

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Independents

Urengoy

Other "old" W.Siberia

ZapolyarnoeYamal

Gazprom

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The Size of the Pipe Market, MMTThe Size of the Pipe Market, MMT

• Nearly all Nearly all new gas new gas pipeline pipeline projects projects require 56” require 56” pipe of pipe of grade X65 grade X65 and higherand higher

• Standard Standard operating operating pressure is pressure is 75 and 85 75 and 85 barsbars

• Gazprom Gazprom considers considers use of X100 use of X100 pipe in pipe in YamalYamal

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56" new 40-48" new Replacement

• 40” and 48” pipe is mostly required for replacement works40” and 48” pipe is mostly required for replacement works

Totally, 12.8 mmt, including 7.5 mmt of 56” pipe


Where Does Gazprom Shop for Pipe?Where Does Gazprom Shop for Pipe?• In Russia, only Volzhsky Pipe Mill can In Russia, only Volzhsky Pipe Mill can

make 56” pipe (spiral-weld)make 56” pipe (spiral-weld)• Ukrainian 56” pipe of Kharzyzsk Mill Ukrainian 56” pipe of Kharzyzsk Mill

is the most popular product for is the most popular product for replacement works and projects of replacement works and projects of local importancelocal importance

• All export projects use imported pipe All export projects use imported pipe (mostly Mannesmann)(mostly Mannesmann)

• Typically, Gazprom gets conditional Typically, Gazprom gets conditional loan through ExIm bank of Germany, loan through ExIm bank of Germany, or Japan, or Italy, etcor Japan, or Italy, etc– By the loan terms, Gazprom has to By the loan terms, Gazprom has to

buy pipe and compressor equipment buy pipe and compressor equipment from the creditor-countryfrom the creditor-country

• European pipe became very European pipe became very expensive, as Gazprom gets paid in expensive, as Gazprom gets paid in Dollars and buys pipe in EurosDollars and buys pipe in Euros


You won’t find a project location in Russia that You won’t find a project location in Russia that looks anything like the site of Aruba refinerylooks anything like the site of Aruba refinery


Most of new pipeline projects are located in Most of new pipeline projects are located in areas where summer looks like thisareas where summer looks like this

october 7, 2004 gas pipeline system of gazprom the total length of gazprom pipelines is about...

Documents

spare capacity

key pipeline capacity

fsu gas pipeline system

capacity deficit

fsu daily flows of gas

lot of bypass capacity

maximum daily flows

fsu neighbors