Colossus with feet of clay. Gazprom is cheaper NOVATEK

The success of the shares of “NOVATEK” is justified. The company has long established itself as an effective and profitable exporter of gas condensate, and now has reached a new frontier. In the near future it will planned capacity unique project Yamal LNG, becoming the largest Russian producer and exporter of liquefied natural gas (LNG) product, which the global gas market the future belongs. This flexible business is much more lucrative and more competitive than the limited geography of pipeline delivery, which specializiruetsya “Gazprom”. (Gazprom holds a controlling stake in the first Russian LNG project on Sakhalin, but only because he managed to “squeeze” the share of foreign participants in the project under strong administrative pressure.)

NOVATEK has been able to prove that the project is feasible, despite the Arctic conditions, high cost, technological problems, as well as the initial reluctance of creditors to contact it got under the American sanctions businessmen. The project has attracted France’s Total and two Chinese participants: China national petroleum Corporation (CNPC) and the silk road Fund. Helped substantial financial help from the Russian national welfare Fund, as well as unprecedented preferential tax conditions for the project by the Russian leadership.

The attention of investors to the company explained. NOVATEK has a good chance to retain a privileged position in Russia and to claim new benefits. In the eyes of the Kremlin, he plays a crucial geopolitical role. The company is not going to stop at “Yamal LNG”. Her plans include a wide expansion in the Arctic, the development of which the Russian leadership has far-reaching plans. She begins the selection of foreign partners for a new project — “Arctic LNG 2” on the Gydan Peninsula (Total already acquired it 10% interest, and a list of other possible participants include companies from China, Japan and even Saudi Arabia). The next plans “Arctic LNG-1 and Arctic LNG 3”, where there is exploration and assessment of gas reserves.

For Arctic projects NOVATEK builds in Belokamenka near Murmansk centre construction of large marine structures (CSMS), and in Kamchatka — a terminal for transshipment of liquefied natural gas from ice-class vessels through the Northern sea route, in ocean-going vessels-LNG. The terminal may in the future become a trading platform for gas sales across the Asia-Pacific region and even to the hub, which will create a regional index prices for gas.

The Kremlin apparently realized that the arrangement of the NSR and economic development of the Arctic is impossible without such innovative projects without the initiative of private business, able to attract foreign investors and foreign technology. “Gazprom” for all its magnitude proved to be an unwieldy and horribly expensive monster, which is impossible to entrust the Affairs of such magnitude and complexity. His numerous projects in the LNG sector has shown a complete failure from the Shtokman field to Vladivostok and from Kharasavey on the Yamal Peninsula to the Baltic. Therefore, as a pioneer of Arctic exploration and was selected NOVATEK, which did not fail to notice potential investors.

With a capacity aimed at the European market of gas, twice the export volume, “Gazprom” went to the enormous cost of laying new pipes. For two infrastructure projects in the Baltic sea “Nord stream 1 and Nord stream — 2” we have laid a new pipeline corridor from the Yamal Peninsula, although the company can economical and effective to use already existing facilities which serve the dying giant fields in the North of Tyumen region. The American magazine, Russian Petroleum Investor, made in 2000-2002 on the basis of “Gazprom”, the cost of the new corridor Bovanenkovo — Ukhta — Torzhok — Baltika reaches $44 billion.

In fact, the company spent the money just to “punish” Ukraine, reduced the transit of gas through its territory. There is no economic sense in these projects was not, as there was no sense in the “South stream” (now called the “Turkish stream”), on which “Gazprom” also spent more than $17 billion without any guaranteed market in South Europe or permission of the regulators of the European Union on such infrastructure. More than 500 km already laid pipes of “Gazprom” now digs for an additional fee by the same contractor.

The much-touted “Power of Siberia”, according to the calculations of Gazprom planners, it is not justified economically in 30 years. To reach the design capacity of 38 billion cubic meters per year, this pipeline will not until 2028, and that if in addition to the Yakutian Chayanda field, “Gazprom” can quickly add the reserves of the Kovykta field in the Irkutsk region, having mastered this field and paving of an additional 800 km of pipes through the forest and hills.

It is not clear why the built and almost dormant pipeline Sakhalin — Khabarovsk — Vladivostok completes the picture. One compressor station design project twelve. At one end there is no gas, the other with consumers.

If you follow the interests of shareholders, and political orders from the Kremlin, the company lost its largest client in Ukraine, which in 2006 bought in Russia is 59 billion cubic meters of gas. And other customers in Europe are now additional costs to secure alternative routes for gas, “Gazprom” already some times, for political reasons, blocked or reduced the volume of supply in periods of peak demand. The unpredictability of “Gazprom” — the most dangerous factor for the energy security of the European Union.

Company with strategy development and business reputation cannot be considered as perspective object for investment. Hence, the low market capitalization. If seven years ago it reached almost $370 billion and now the cost of monopoly fell to $51 billion.

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