Gazprom revives Nord Stream boost
Three European companies will back the doubling of the Nord Stream gas line
Russian gas monopoly Gazprom has found three major European companies to back the doubling of the Nord Stream gas line, signing a memorandum of understanding at the St Petersburg International Economic Forum on 18 June.
They are planning to launch soon a project company which will be able to draw extensively on the experience of Nord Stream AG, operator of the first two lines.
The partners to the MoU are German utility E.ON - to be rebranded Uniper from early 2016 and a shareholder in Nord Stream; Anglo-Dutch Shell; and Austrian OMV.
The new capacity will bring the line from 55bn cubic metres/year to 110b cm/y, if the MoU progresses beyond the front-end engineering phase. At the moment the line consists of two strands each of 27.5b cm/y, running from Vyborg near Russia's border with Finland to Greifswald, in northeast Germany. They came into operation in successive autumns in 2011 and 2012.
From there the line forks, with one line (Opal) running south towards the Czech Republic and the other (North European Line) running west towards the Netherlands. Gazprom is a shareholder in both onshore lines as well.
Gazprom declined to comment on whether the new offshore lines would follow the old route, or whether one of the two lines might go directly to the UK - which had once been considered. But it did say that the line was independent of plans to build TurkStream, which is aimed at delivering gas to its markets in southern Europe.
The company said that the gas would not come from a specific field and did not comment on whether it would need to build more capacity in western Russia to deliver this extra gas to the export point.
The new line, together with the fully-operational Yamal-Europe line, would make Ukraine all but irrelevant as a transit country for Russian gas and TurkStream would complete that job. The cost of delivering that gas would be higher than paying Ukrainian transit fees. But the western European companies are all buyers of Russian gas with large customer portfolios and in some cases with shrinking production in Europe. Shell's Dutch output from the Groningen field is being capped by the government while the North Sea, where E.ON is active in the Norwegian and UK sectors, is in decline.
"Extra gas transmission facilities along the shortest route connecting gas fields in Russia's north to European markets will provide for higher security and reliability of supplies under new contracts," said Gazprom's chief executive Alexey Miller.
OMV and Gazprom also signed an MoU on future long-term business projects. They agreed to evaluate the prospects for OMV's participation in the project for the development of blocks IV and V in the Achimov deposits of the Urengoy oil, gas and condensate field on the basis of a possible assets swap.
And Shell and Gazprom also signed an MoU to expand the Sakhalin Energy LNG plant in Russia's far east, the country's only such export plant. That is aimed at increasing security of gas supply in the Asia-Pacific region. The two trains have nameplate capacity of 9.6 million t/y of LNG but typically produce more than that; and the partners are considering adding a third. The MoU sets the deadlines for the design stage as well as preparing the project for the final investment decision.