TRANS-BLACK SEA PIPELINE CAN BRING CASPIAN GAS TO EUROPE

A New York-based consortium of several independent parties is completing the pre-feasibility study for a Georgia-Ukraine-European Union (GUEU) gas pipeline project. Led by the London-based Pipeline Systems Engineering (PSE) and the New-York-based Radon-Ishizumi consulting and engineering firms, the project envisages bringing Caspian gas to EU territory by pipeline via Georgia and the seabed of the Black Sea in the first phase, and connecting that line to a trans-Caspian pipeline in a follow-up phase.

The GUEU line is projected to carry 8 billion cubic meters of gas annually in the first phase from Azerbaijan’s giant Shah Deniz offshore field. With at least 1 trillion cubic meters in estimated reserves, Shah Deniz has ample potential for supporting more than the existing Baku-Tbilisi-Erzurum pipeline (BTE) and the planned Turkey-Austria (Nabucco) line. The GUEU pipeline targets Poland via the Black Sea and Ukraine with a relatively modest first-phase volume. Thus, the project in no sense competes with BTE or Nabucco for upstream resources or downstream markets. The GUEU projects offers an additional, necessary outlet for Caspian gas.

The planned GUEU line would branch off from BTE near Tbilisi and run for approximately 100 kilometers to the Supsa area on Georgia’s Black Sea coast. From there it would continue at ultra-deep levels across the seabed for 650 kilometers to Ukraine’s Crimea near Feodosia. Finally it would run on land for another 200 kilometers to link up with Ukraine’s gas transit mainlines headed for Poland. GUEU’s section across the Crimea might use an existing, 20-inch diameter pipeline, possibly rehabilitating or reconstructing some of its sections for the project’s first phase. However, the GUEU pipeline’s anticipated diameter is 42 inches for the land section in Georgia and 24 inches for the seabed section.

The project looks at an attractive range of market options in Poland and, via that country, Lithuania, or alternatively to Slovakia from Ukraine. All three countries are keen to diversify their supplies away from overdependence on Russian gas.

The GUEU project envisages using the Ukrainian transit network’s spare capacity to deliver Caspian gas to Poland and farther afield. Ukrainian transit pipelines have some unused capacity already now and will have more spare capacity after 2010, when Russia is expected to switch some export volumes from Ukrainian pipelines into the new Russia-Germany pipeline (North Stream).

However, the GUEU project would circumvent Ukraine’s gas transit system in the event that Russia obtains some form of control over Ukraine’s gas transit pipelines. In that eventuality, the GUEU pipeline could reach EU territory in Romania. The plan envisages laying a 200-kilometer pipeline from the Crimea, again on seabed of the Black Sea — in shallow waters on that stretch — reaching Romania at a point northward of Constanta.

The highly challenging seabed section from Georgia to the Crimea can use the experience gained in laying the Blue Stream gas pipeline from Russia to Turkey on the seabed of the Black Sea. A technological feat accomplished by Italy’s ENI and Saipem, that line runs in ultra-deep waters reaching 2,200 meters below the surface in some places — the world’s deepest-running pipeline. The seabed between Georgia and the Crimea is almost as deep.

Some of the engineers that worked in top posts on Blue Stream are said to be a moving force behind the GUEU project. The Saipem 700 J-laybarge was also key to Blue Stream’s success.

The planned Georgia-Ukraine pipeline would intersect with the Blue Stream pipeline on the seabed. The project envisages lifting the GUEU line by an overpass bridge to be built at the point of intersection.

Investment for the project’s first phase is estimated at $2 billion over a five-year period, based on an annual throughput capacity of 8 billion cubic meters of gas. The second phase would add another 8 billion cubic meters of gas annually, either from Shah Deniz or from Kazakhstan by trans-Caspian pipeline. That expansion would require a parallel 24-inch diameter pipeline on the seabed from Georgia to the Crimea. The third phase would add another 16 billion cubic meters of gas annually from Turkmenistan, based on the expectation that trans-Caspian links would be in place by that time. In that relatively optimistic eventuality, GUEU could carry a total 32 billion cubic meters of Caspian gas annually to EU territory.

The GUEU project can provide a politically safe, shortest-route export outlet for Caspian gas to European consumer countries. It would advance the access of Caspian gas to Ukraine and the EU countries. Its planned second- and third-phase schedule is calculated to advance the time of full development of gas extraction in Kazakhstan and Turkmenistan and construction of trans-Caspian pipeline links.

(GUEU documentation, November 2006)