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Alexey Miller lists seven reasons for northern export corridor’s increased economic efficiency

Alexey Miller, Chairman of the Gazprom Management Committee, gave a speech today at the Geo-Economics of Large-Scale Infrastructure Projects panel session that took place at the St. Petersburg International Economic Forum 2016.

In his speech, Alexey Miller listed seven main reasons for the increased economic efficiency of the northern export corridor.

Gazprom's resource base is shifting north. The Company's resource base is shifting northward from the Nadym-Pur-Taz region to Yamal.

Domestic production is declining across northwestern Europe. Gas production is falling primarily in northwestern Europe, which results in export flows moving from the center to the north.

Shortest export route to northwestern Europe. The route that starts in Yamal and includes the Nord Stream pipeline is 1,885 kilometers shorter than the one via Ukraine's gas transmission system (GTS). Specifically, the route is shortened by 1,010 kilometers when gas is conveyed across Russia. The route across Ukraine is nearly 1.5 times longer.

Most efficient route in terms of transmission costs. It is 1.6–2 times (depending on the tariffs for gas transmission across Ukraine) cheaper to deliver gas to Germany from Yamal via Nord Stream 2 than via Ukraine's GTS.

Thanks to state-of-the-art technologies, the northern corridor's gas consumption for own transportation needs is reduced 6 times compared to 5.5 MPa GTSs and 3 times compared to 7.5 MPa GTSs.

Redistribution of domestic gas flows in Russia and decommissioning of excess capacities in the central corridor. By optimizing the system load through decommissioning excess capacities (linear sections and compressor shops), Gazprom saves up to USD 2 billion.

High dividend yield of the Nord Stream 2 project. Gazprom's accumulated after-tax dividends will total USD 6.9 billion by 2045.

Considerable reduction of harmful emissions. The route from Yamal via Nord Stream 2 produces 5.6 times fewer harmful emissions than the route across Ukraine. The Ukrainian route will produce 223 million tons of CO2 equivalent more over the course of 25 years than the northern route. In order to absorb that volume of harmful emissions, Germany would have to increase the acreage of its forests by 15 per cent.

At the end of his speech, Alexey Miller noted that, over the next 25 years, gas deliveries via Nord Stream 2 would be 2–2.7 times more economically efficient than the ones via Ukraine's GTS, which translates into USD 45–78 billion.

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