South Stream Cost Swells to EUR 16 B
The construction of the South Stream gas pipeline will cost EUR 16 B, not EUR 15.5 B, as initially planned, according to Alexey Serebryakov, First Deputy Head at Gazprom's Project Management Department.
In an interview cited by Bloomberg, Serebryakov specifies that only initial cost estimates are available, while the final price tag will become clear in mid-July, when the tenders for the construction of the pipeline will be over.
The cost of the Black Sea underwater section of the pipeline remains at EUR 10 B, but the overland sections will cost EUR 6 B rather than EUR 5.5 B, as initially planned.
Serbia and Hungary have already adopted the final investment decisions on the South Stream project.
The cost of the Serbian stretch of the gas pipeline is estimated at EUR 1.7 B, but the cost of the Hungarian leg of the pipeline has not been announced yet.
Bulgaria is expected to sign the final investment decision on the Russia-backed gas pipeline project on Wednesday or Thursday next week.
Bulgaria has tied its approval for the South Stream project to the signing of a favorable gas supply contract with Russian Gazprom taking effect January 2013.
The Bulgarian government announced Wednesday that the cost of the Bulgarian section of South Stream would be slightly over EUR 3.308 B.
Russia started building the section of the pipeline on its territory in July 2012, with plans to launch the sea section in December.
According to Gazprom data cited by RIA Novosti, the South Stream gas pipeline is to carry 15.75 billion cubic meters of gas in 2016, which will increase to 47.25 billion cubic meters in 2017, reaching the full capacity of 63 billion cubic meters in 2018.
Initial forecasts provided that South Stream would reach full capacity in 2019.
The latest increase in the cost of South Stream comes after Gazprom CEO Alexey Miller announced a price tag of EUR 8.6 B in May 2009, which was revised to EUR 15.5 B one year later.
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