South Stream Russia-Europe Pipeline to Cost $20B

Russia’s Energy Ministry has announced a preliminary cost assessment of the South Stream pipeline project, a major gas export route to Europe, at $20 billion, a ministry spokeswoman said Wednesday.

The pipeline, which according to plan should carry 30 billion cubic meters of natural gas per year to Europe starting in 2013, will be built jointly by Russia’s gas export monopoly OAO Gazprom and Italy’s Eni SpA.

The initial assessment of the project cost, reported by Eni at the beginning of 2008, was about $10 billion.
Analysts regard the cost increase as negative for Gazprom. Construction of the pipeline would mean a 3% increase in Gazprom’s capital expenditure from 2010 to 2013, which would lower the company’s fair value by about 1.5%, Metropol brokerage in Moscow estimates.

Rigzone