Early next year, the first gas will flow from Russia and under the Black Sea to Turkey. Turkey’s private and industrial consumers using this gas will be unaware of the problems solved in getting it to them.
The project to which Russian and Turkish authorities gave the go-ahead when they signed an Inter-Governmental Agreement in December 1997 was a challenging one with a clear target Russias Gazprom was to transport 16 billion cubic metres of gas from Russia to Turkey every year.
The only common border between Russia and Turkey runs through the Black Sea whose depth reaches more than 2,000m. This posed a major challenge that was made even greater due to the fact that Gazproms previous experience was mostly related to onshore pipelines, and that no pipelines have ever before been installed at such water depths.
But the deep waters are only one of the technological challenges a steeply sloping seabed with seismic activity along both coasts is another. Co-ordinating the project between the parties involved, financing the entire project and coping with the political challenges have also been demanding.
But, says technical director Vladimir Borovik, formerly of Gazprom, if we hadnt been sure that we could overcome these challenges, wed never have started on this project. Through an extensive collaboration with some of the foremost experts from outside Russia and Turkey, weve already put most of the challenges behind us and were well prepared for those were now facing in actually laying the two pipelines.
Merging to form Blue Stream The idea now being realised originated with Russias Gazprom. While Russia is the largest gas-producing nation in the world, with around 1/3 of all total proven reserves, Gazprom is the largest Russian energy company. It has over 300,000 employees and operates more than 140,000 km of gas pipelines.
The Russians were the ones who saw the opportunities and they contacted us, explains Boroviks Italian counterpart, technical director Salvatore Caruso of SNAM. SNAM is a subsidiary of Italys ENI Group and deals with the supply, transportation and distribution of natural gas. ENIs position in the Italian energy industry is similar to that of Gazprom in Russia. The ENI Group has a total of nearly 72,000 employees and is also the largest shareholder in SAIPEM, the company responsible for laying the pipelines.
The two companies Gazprom and ENI own equal shares in their joint venture, Blue Stream Pipeline Company BV (BSPC). Both Borovik and Caruso are now employed by this company, with a staff of 20. Once the first gas comes through the pipelines to Turkey, Blue Streams staff will be cut back to a minimum. Gazprom will be responsible for regular gas deliveries.
That Blue Stream is currently operated by a joint Russian-Italian management team may seem cumbersome and inappropriate, comments Salvatore Caruso. But weve found a way of working and collaborating. In Italy we have a saying four eyes see better than two, and we practise this philosophy in Blue Stream.
Borovik sees no reason to focus on the companys internal organisation and work processes. Instead, he emphasises the practical division of labour not just between the Italians and Russians, but also between all those involved. In a project worth more than two billion U.S. dollars, some decisions will be complex. But the way in which Blue Stream is organised has created an effective decision-making process.
The project as a case study
Financing Blue Stream has also been a challenge. The Inter-Governmental Agreement entered into between the two countries authorities, which is of political significance to both these countries and their neighbours and under which Blue Stream has many industrial partners, is now used as a case study at academic conferences.
Most of the challenges have been solved by carrying out thorough feasibility studies. DNV has been extremely supportive here and is one of our most important business partners in this project. Risk analyses have made us aware of the possible risks, emphasises Boroviks right hand man, offshore technical manager Andrey Voronov.
The practical division of this project has mainly been along the coast of the Black Sea. The Russians have more experience than anyone else of laying onshore pipelines, and of the intermediate compressor stations. The Italians have the necessary offshore experience from laying pipelines to their own country from Africa and from participation in international projects.
An example is the Transmed Project, where Italian offshore technical manager Stefano Dicorrado was in charge of following the construction activities. The underwater pipelines from Tunis to Italy through the Mediterranean Sea at a maximum water depth of 610 metres remains for some more months a world record for such large diameter sealines.
To DNVs Pipeline Rules
All four top executives emphasise that DNVs offshore experience has been vital throughout the entire project, from planning to pipelaying. Says Voronov, The Russian authorities didnt have national standards or sets of requirements relating to pipelines in deep waters. Blue Stream is based in its entirety on DNVs Pipeline Rules. Once this pipeline has been completed, Russian standard requirements will probably be established and the experience gained on Blue Stream will be incorporated into and help to modify the original DNV standard.
Blue Stream will supply 16 billion cubic metres of gas to Turkish consumers annually. Turkeys total gas requirements are expected to increase to approximately 80 billion cubic metres by 2020. The entire European gas market is expanding rapidly, and restrictions on a free energy market in the EU are being lifted. The need for energy, particularly gas, is also expected to grow in the politically unstable Middle East.
Turkey the strategic bridge
In the gas market of the future, Turkey may be in the position of a bridge-builder between three continents, forecasts Caruso. Its no secret that all the parties involved in Blue Stream see these opportunities and the advantages that this project may then give. The need for energy will grow and this means that the knowledge and experience were now gaining in Blue Stream will be much sought after.
Russia in general and Gazprom in particular play an extremely important role in the development of the energy market in this part of the world. Around 1/3 of the worlds proven gas reserves are in Russia. Gazproms gas sales last year amounted to 430 billion cubic metres, around 30% of which were sold to Europe.
Gazproms deputy chairman, Sergey Dubinin, offers two examples of projects that may be developed to transport gas out of Russia over the next few years: The Yamal-Europe gas pipeline and Northern European gas pipeline from Russias Barents Sea may considerably increase the volume of gas exported from Russia. Feasibility studies being carried out on our northernmost gas field Shtokmanovskoye show that this field alone may produce 90 billion cubic metres of gas each year.
For Blue Streams management and business partners, this proves that there will be an opportunity to utilise the experience now being gained in Moscow, Milan, on the shores of the Black Sea and, not least, 2,150 metres below its surface.
