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www.eprg.group.cam.ac.uk EPRGWORKINGPAPER
 

Summary: www.eprg.group.cam.ac.uk
EPRGWORKINGPAPER
Abstract
The Economics of the Nord Stream Pipeline
System
EPRG Working Paper 1026
Cambridge Working Paper in Economics 1051
Chi Kong Chyong, Pierre Nol and David M.
Reiner
We calculate the total cost of building Nord Stream and compare its
levelised unit transportation cost with the existing options to transport
Russian gas to western Europe. We find that the unit cost of shipping
through Nord Stream is clearly lower than using the Ukrainian route and
is only slightly above shipping through the Yamal-Europe pipeline.
Using a large-scale gas simulation model we find a positive economic
value for Nord Stream under various scenarios of demand for Russian
gas in Europe. We disaggregate the value of Nord Stream into project
economics (cost advantage), strategic value (impact on Ukraine's transit
fee) and security of supply value (insurance against disruption of the
Ukrainian transit corridor). The economic fundamentals account for the

  

Source: Aickelin, Uwe - School of Computer Science, University of Nottingham

 

Collections: Computer Technologies and Information Sciences