Bloomberg News

Gazprom to Spend $2 Billion to Boost EU Gas Flows via Belarus

November 22, 2012

OAO Gazprom (OGZD) will invest $2 billion to expand Belarusian natural-gas pipelines and boost fuel transit shipments from the nation to the European Union by 30 percent, Chief Executive Officer Alexey Miller said.

Expanding gas storage facilities will cost a further $1.1 billion, and the Russian gas export monopoly plans to approve its three-year and 10-year investment plans for Belarus this month, Miller said near Minsk, where Gazprom opened a gas distribution station today.

Gazprom, which meets about a quarter of European gas demand, is investing in new pipelines to bypass Ukraine, now the main transit route for Russian gas. Gazprom has repeatedly clashed with Ukraine over prices and volumes in gas contracts, which led to supply disruptions to E.U. members.

The gas exporter is shifting some Europe-bound volumes to Belarus, where it owns the pipeline network, and the Nord Stream pipeline, a direct link to Germany from Russia under the Baltic Sea. It will also start construction of the South Stream pipeline to central Europe under the Black Sea next month.

“We agreed to consider very thoroughly the possibility of increasing transit of Russian gas through Belarus by 30 percent,” Miller said. He also met with Belarus’ President Aleksandr Lukashenko today, Gazprom said in a statement.

Gazprom will begin work to reconstruct infrastructure in Belarus to increase the transit volumes as early as next year, Miller said.

Gazprom’s transit volumes to Belarus will total 44.5 billion cubic meters this year, according to Miller. That’s about 30 percent of the Moscow-based company’s total exports to Europe in 2011 and means full use of current transit capacity, he said.

Shipments to Belarus will increase by 10 percent from the previous year to 22 billion cubic meters, he said.

Gazprom last year gained control of the Beltransgaz pipeline operator by acquiring the half of the company it didn’t already own for $2.5 billion, while lowering gas prices for Belarus.

To contact the reporter on this story: Aliaksandr Kudrytski in Minsk, Belarus at akudrytski@bloomberg.net

To contact the editor responsible for this story: Balazs Penz at bpenz@bloomberg.net


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