Nord Stream pipeline to face cost overruns
Construction of a gas pipeline across the Baltic -- the Nord Stream project -- is turning out to be more expensive than expected, according to the Gazeta.
Dirk von Ameln, technical director of the project, said recently that construction of the sea part of the pipeline will cost significantly more than the earlier planned $7.4 billion.
The cost overrun amount has not been disclosed. According to von Ameln, the project manager will publish the new figures in March.
Earlier, an almost three-fold increase -- from $1.1 billion to $3 billion -- was announced for the overland part of Nord Stream (the Gryazovets-Vyborg gas pipeline). As a result, this sector has become Gazprom's most expensive overland pipeline project.
Gazprom deputy head Andrey Kruglov said the issue involves only one line of the pipeline's planned two. Even taking into account that the second line will use the already-created infrastructure, it turns out that the overland part of Nord Stream (its Russian sector) will cost approximately $5 billion. According to preliminary calculations, the sea part should cost one and a half to two times more than the Gryazovets-Vyborg pipeline.
The Gazeta reported that Nord Stream is not the only pipeline project whose cost had to be reviewed. Last summer the State Expert group confirmed the correctness of the recalculated costs for the East Siberia-Pacific Ocean oil pipeline. In comparison with the previous price, it grew by 11 percent -- from $11.2 billion to $12.5 billion. During the entire time of its existence, the project's costs almost doubled.
The route of Nord Stream has still not been determined.
Turkish gas flow to resume soon, Greek utility says
Regular natural gas shipments from Iran to Turkey will resume next week, possibly on Monday, following a same-day confirmation that gas shipments to Greece via Turkey from Azerbaijan have ceased, according to the Athens News Agency.
The news came two months after a natural gas pipeline between the two countries was inaugurated in November 2006.
Some media reports cited statements by Iranian officials saying weather conditions in Iran caused a decrease in gas shipments to Turkey and not a total interruption.
Meanwhile, other reports said Turkey will import electrical power from Greece, given that the shortage in natural gas was reportedly straining power output in the neighboring country. According to reports, 50 percent of power generation in Turkey is fueled by natural gas.
Officials with Greece's state-run natural gas utility said Wednesday the development will not affect the country's production, as supplies from other providers (i.e. Russia) are uninterrupted, while reserves of liquefied natural gas are also available from the utility's Revythoussa isle site.
OPEC hints at oil price hike
OPEC has hinted that oil prices will keep rising in the first quarter of the year before stabilizing in the second quarter, the Ghanaian Chronicle reported.
"I'm expecting oil prices to keep rising in the first quarter of the year," said Chakib Khelil, the president of the Organization of Petroleum Exporting Countries.
Goldman Sachs, the most active investment bank in energy markets, believes the same. It kept its average 2008 price forecast unchanged at $95.
"We maintain that the combination of tighter short-term fundamentals and escalating costs will continue to provide strong support to oil prices in 2008, with the risk skewed to the upside from current levels," it said.
Crude-oil speculators on the New York Mercantile Exchange raised their net long positions near to a two-month high in the week ended Dec. 24, the Commodity Futures Trading Commission said Friday.
The increase in bullish sentiment came just before oil prices hit last week's peaks.
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Closing oil prices, Jan. 11, 3 p.m. London
Brent crude oil: $92.46
West Texas Intermediate crude oil: $93.99
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