Russ Oil-Gas

April 2006 The Kommersant - by Nataliya Grib - Gazprom has announced the cost of the North European Gas Pipeline project putting it on $12 billion. Thus, the Russian gas monopolist will pay $1.7 billion more for construction of the pipeline than for the first stage of the development of Shtokman gas field. The latter project had been viewed as the company's most expensive one until yesterday. Bogdan Budzulyak, a director at Gazprom's board, announced yesterday that the North European Gas Pipeline project is estimated at $12 billion. Gazprom deputy CEO Alexander Medvedev, in charge of the project, specified the matter. $6 billion is to be spent on the above-ground section while $5.4 billion will go to the underwater part. The company's press service reported that the $6 billion will be spent not only on the laying of the 900-km gas main from Gryazovets to Vyborg but also on "a large-scale development of the United Gas Supply System in North Western Russia." The funds will be shared between the construction of an additional gas main leading to St. Petersburg as well as new pipelines in Yamalo-Nenets Autonomous Areas. The North European project will apparently cost Gazprom more than the first stage of the Shtokman project. Gazprom is to put the total of $8.7 billion in the Shtokman field, $6 billion of which is for the above-ground section while $2.7 is intended for the underwater part. The financing scheme for the North European Gas Pipeline has been patched up after a scandal involving former German Chancellor and the project's new top manager Gerhard Schroder erupted. The former official was accused of p a loan guarantee for Gazprom during his term in office. Gazprom, however, refuted the speculations.