MOSCOW, September 12 (RIA Novosti, Sergei Ryabikin) - The North European Pipeline will bring in as much as $4 billion within one year of its launch, a Russian analyst said Monday.
Valery Salygin, Director of the International Institute for Energy Policy and Diplomacy, said the project, to be built by an international consortium involving the Russian natural gas monopoly Gazprom and German energy majors BASF and E.ON, would not take long to recoup its production costs, estimated at $5 billion. The pipeline's initial capacity after its launch in 2010 is projected at 27.5 billion cubic meters of natural gas per year, and the current gas prices in Western Europe are as high as $160 or $170 per thousand cubic meters.
Salygin said the pipeline would enable Gazprom to create an additional route for the supply of natural gas to the steadily growing European market. "The North European Pipeline is special in that it doesn't cross any transit countries," he said.
Salygin said the 1,200-kilometer pipeline, to run both over land and along the Baltic sea floor, would give Germany a direct link to the huge hydrocarbon deposits in Russia, including the pipeline's main base, Siberia's Yuzhnorusskoye oil & gas deposit, whose reserves are estimated at more than 700 billion cubic meters.
In addition, the project will enable BASF and E.ON to optimize the structure of their natural gas purchases amidst increasingly fierce competition on the global market while also increasing the reliability of gas supplies to European countries, Salygin said.
After 2010, the pipeline will expand to include a second track, thereby doubling its capacity to an annual 55 billion cubic meters. The two lines will require 4 billion euros to build; the construction of the over land segment will begin later this fall.
