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REUTERS SUMMIT-Russian Nord Stream-2 on track with pipes expected soon

Tue, 13th Sep 2016 12:30

* For other news from Reuters Russia Investment Summit,click on http://www.reuters.com/summit/russia16

By Svetlana Burmistrova

MOSCOW, Sept 13 (Reuters) - Pipes to build Moscow's NordStream-2 are expected to start being supplied in December orJanuary, in a sign the gas project is going ahead, IvanShabalov, owner of Pipe Innovation Technologies (PIT), told theReuters Russia Investment Summit.

The plan, designed to double the capacity of the existingpipeline on the bed of the Baltic Sea from Russia to Germany,has irked the European Union, which is trying to cut the bloc'sdependency on energy supplies from Moscow.

Russian natural gas supplies to Europe, whereKremlin-controlled Gazprom owns a 31 percent share ofthe market, have become increasingly politicised since 2014 whenMoscow annexed Ukraine's Crimea region.

Although Shabalov's firm does not supply pipes for NordStream-2, one of his companies plans to provide cement coatingfor some of the pipes which are being used in the project andGazprom is its customer.

Shabalov, who founded his firm in 2006 and also heads theRussian pipemakers association, said he expected construction ofNord Stream-2, which was due to start in 2018, to go ahead asplanned as production of the pipes had already begun.

"Supplies are seen starting in December-January," he toldthe Reuters Investment Summit at the Reuters office in Moscow.

Some 2.2 million tonnes of steel pipes will be supplied byEuropipe GmbH, a consortium which includes Salzgitter, with 40 percent of the contract and Russian companiesOMK (33 percent) and Chelpipe (27 percent).

Last year Gazprom and its European partners, including E.ON, Wintershall, Shell, OMV and Engie, agreed on Nord Stream 2, whichwill double the 55 billion cubic metres per year of the existingpipeline.

Demand from Gazprom's domestic projects will fall to 1.2-1.3million tonnes of large-diameter pipes (LDP) this year - valuingthem at $1.8 billion - from a peak of more than 2 milliontonnes in 2015, Shabalov said.

Gazprom is seeking to bypass Ukraine, a key transit routefor Russian gas to the EU and is also pushing on with the plansto build a gas pipeline to Turkey and beyond to Southern Europe.

The company also plans to complete the Power of Siberiapipeline to China in 2019-2020, part of Moscow's push for closerties with Asia despite many analysts questioning its economics.

"When we built a pipeline to Germany in (the) 1970s, it wasnot profitable in some respects, this was pure political,"Shabalov said.

"The return of projects like this is the beyond the 20 yearhorizon... The infrastructure project stands out as only thestate can venture to build it."

Follow Reuters Summits on Twitter @Reuters_Summits (Additional reporting by Polina Devitt, Katya Golubkova,Christian Lowe, Jack Stubbs, Denis Pinchuk, Nastya Lyrchikovaand Oksana Kobzeva; Writing by Vladimir Soldatkin; Editing byAlexander Smith)

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