BP-led pipeline cost may swell by two-thirds

Nov 13, 2003 01:00 AM

The cost of building a proposed BP-led pipeline that will transport Russian gas more than 4,000 km to China and South Korea may swell two-thirds to $ 18 bn, a Korea Gas official said.
The cost of building what would be Asia's longest gas pipeline may rise from an initial estimate of $ 11 bn in 1995 because of the higher-than-expected costs of developing the Russian fields, said Baek Mun-seok, manager of international projects at Korea Gas, the world's biggest buyer of LNG.

Baek said one of the reasons for the higher cost estimate was that the field contained double the amount of gas than first thought. He said more details would be available when Korea Gas, Rusia-Petroleum, in which BP has a major stake, and China's state-run China National Petroleum Corp. are due to announce the result of their joint study into the project.
"Building the pipeline is good for the buyers because they'll be able to command a better price when they go into negotiations with suppliers," said Lee Chang-mok, an energy analyst at Woori Securities in Seoul.

The proposed pipeline would tap gas from fields near Lake Baikal in eastern Siberia and skirt Mongolia, running via Harbin in north-eastern China to South Korea via the Yellow Sea, bypassing North Korea.
The project would send 20 bn cmpy of gas to China and 10 bn cm to South Korea.

Source: Moscow Times
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