Importance
The Russia-Turkey gas pipeline (Blue Stream) is a unique gas transmission network. Thousands of specialists from Russia, Italy and Turkey have been involved in the pipeline construction using domestic as well as western (Italian, German and Japanese) materials and equipment.
Blue Stream is aimed at Russian natural gas supply to Turkey via the Black Sea offshore area avoiding third countries. The project is an additional way for the existing gas transmission corridor from Russia to Turkey crossing the territory of Ukraine, Moldova, Romania and Bulgaria. Gas deliveries via Blue Stream will significantly increase gas supply reliability in the aim of developing Turkey’s gas market and infrastructure.
Italian Company ENI is the Gazprom’s strategic partner for the Blue Stream construction which has a great experience in offshore gas pipeline construction owning the world's largest pipe-laying fleet.
The Blue Stream construction is a new stage to develop gas transportation technologies. Many experts abroad doubted the mere feasibility of the gas pipeline construction at water depth up to 2150 meters in aggressive hydrosulfuric environment.
History
On December 15, 1997, Russia and Turkey signed the Intergovernmental Agreement. Pursuant to the Agreement, Gazprom and Botas Turkish Company signed a 25-year contract to supply 365 bcm of gas to Turkey via Blue Stream.
In February 1999, Gazprom and ENI Italian Company signed the Memorandum of Understanding to participate in the Blue Stream project implementation.
On November 16, 1999, Gazprom and ENI registered in the Netherlands the 50/50 Russian-Italian Blue Stream Pipeline B.V. Company. At present, this company acts as the offshore pipeline section owner, including the Beregovaya compressor station (Beregovaya). Gazprom is the owner and operator of the onshore pipeline section.
On November 23, 1999, Blue Stream Pipeline B.V. Company and Saipem, Buig Offshore S.A., Katran K companies and the Japanese consortium of Mitsui Co. Ltd, Sumitomo and Itochu signed prime contract on designing, equipment supply as well as the Blue Stream offshore section construction. On December 20, 2000, the contract came into force.
On November 27, 1999, the Intergovernmental Protocol to the Agreement of December 15, 1997 was signed stipulating particularly preferential tax regime for the Blue Stream project.
On June 16, 2000, upon ratification by the Russian and Turkish Parliaments, the Protocol came into force.
In April 2001, all preconditions to start a full-fledged project financing were fulfilled. In May 2001, the Credit Agreements under the project at the total sum of US$ 1.7 bln came into force with provision of first payments.
In February 2000, construction of the Russia’s gas pipeline land section was started.
In August of 2001, Beregovaya’s construction was commenced.
From September 2001 through August 2002, construction works of the tunnel across the Kobyla Ridge were carried out.
In September 2001, the sea section construction was started. Castoro-8 ship was involved in construction of a two-line gas pipeline in the shallow waters near the Russian coast.
From October 2001 through May 2002, Saipem-7000 pipe-layer accomplished construction of a deep-water part of the marine section. In June 2002, construction of the marine section was completed.
From May through September 2002, construction of a tunnel under the Bezymyanny Ridge was completed.
On December 30, 2002, at the Durusu terminal (Turkey) the Protocol to start the Blue Stream commissioning was signed. The Protocol stipulated the readiness to start gas supplies via Blue Stream.
In November 2005, the Blue Stream project has been officially inaugurated at the Samsun-based Durusu gas metering station (Turkey). Attending the inauguration were Russian President Vladimir Putin, Turkish Prime Minister Recep Erdogan, Italian Prime Minister Silvio Berlusconi as well as the Gazprom Management Committee Chairman Alexey Miller, BOTAS’ Chairman of the Board and General Manager Riza Ciftci and ENI’s Chief Executive Officer Paolo Scaroni.
In November 2005, the Gelendzhik District of the Krasnodar Krai hosted the Beregovaya’s first stage commissioning. The first stage includes three gas pumping units and two turbo generators.
Description
Blue Stream is 1213-km-long. The gas pipeline consists of three sections:
Russia’s land section is 373-km-long from the town of Izobilnoye, Stavropol Krai, up to the settlement of Arkhipo-Osipovka, Krasnodar Krai, and to the Black Sea coast;
Russia’s marine section is 396-km-long from the settlement of Arkhipo-Osipovka of the Krasnodar Krai (Russia) up to the Durusu terminal located 60 kilometers off the town of Samsun (Turkey);
Turkey’s land section is 444-kilometers-long from the town of Samsun to Ankara.
Russia’s land section integrates the Stavropolskaya and Krasnodarskaya compressor stations in the Stavropol and Krasnodar Krais, respectively.
The marine section includes the Beregovaya, the world's largest and unique operating compressor station. It has a 150 MW capacity keeping gas pressure at 250 atm.
Blue Stream’s diameter is equal to 1,400, 1,200 and 610 mm in land, mountain and marine sections, respectively.
The Blue Stream’s design capacity amounts to 16 bcm per year.
Within the contract it is planned to supply 2 bcm, 4 bcm, 6 bcm, 8 bcm, 10 bcm, 12 bcm and 14 bcm from 2003 to 2010 via Blue Stream, respectively.
Financing
Blue Stream’s total cost is at US$ 3.2 billion, including US $1.7 billion to construct the marine section and Beregovaya.
Gazprom and Blue Stream Pipeline Company BV as well as the bank consortium consisting of Banca Commerciale Italiana SpA, Mediocredito Centrale and Westdeutsche Landesbank Girozentrale signed the US$ billion 1.13 Credit Agreement aimed at executing the project.
US$ million 627 have also been attracted for the gas pipeline construction from Japan Bank for International Cooperation JBIC and the consortium chaired by FUDJI bank with participation of Japanese insurance company NEXI/MITI.
The total loan sum attracted is amounted to US $1.7 billion providing Gazprom with money to finance construction of the marine and partially land sections. A part of financial resources for the Blue Stream marine section was provided by Gazprom’s project sponsors and SNAM S.p.A as well as a US$ 866 million loan attracted under the SNAM S.p.A.’s guarantee. The rest part of financial resources for the land section construction was provided by Gazprom owned financial resources as well as debt payments. Particularly, in December 2000 Gazprom took a mid-term credit in amount of Euro 250 million from the consortium of international banks chaired by HypoVereinsbank AG.
Gazprom managed to attract these funds under sharp decrease in investment rating of the Russian companies. In 2000, the Project Finance Magazine recognized Gazprom’s scheme to attract financial assets as the Deal of the Year.
Technical features
Taking into account that more than 60 km of the gas pipeline (situated in the Russian territory) crosses mountains, but water depth at the marine pipe laying area reaches 2,150 m in aggressive hydrosulfuric environment. In the aim to increase the gas pipeline reliability special technical innovations were applied including:
For the first time ever in the Russian oil-and-gas industry, Blue Stream’s onshore section has seen the construction of tunnels in mountainous terrain under the Kobyla and Bezymyanny Ridges. The total tunnel length is equal to 3,260 m.
Nature protection services were carried out in parallel with the gas pipeline construction including land reclamation along the whole pipeline construction route, preservation of more than 4 hectares of relic woods at tunnel method crossing the Kobyla and Bezymyanny Ridges.
Current situation
Blue Stream’s startup complex has been constructed and Stavropolskaya as well as Beregovaya’s first phase have been commissioned.
As of January 1, 2006, Turkey has received 9.6 bcm of gas since the pipeline launch, with 3.2 and 5 bcm of gas supplied over 2004 and 2005, respectively.
Contractual deliveries for 2006 are at 8 bcm.