Bypassing Ukraine will be costly for Russia's Gazprom, experts say

Jul 17 2015, 17:22 ET | About: Gazprom OAO ADR (OGZPY) | By: Carl Surran, SA News Editor 

• Russia's plans to drop Ukraine as a route for pumping natural gas to Europe will still leave Gazprom (OTCPK:OGZPY) facing ~$1B in annual transit fees to Slovakia and Bulgaria for years to come, analysts and industry sources say.
• Russia wants to bypass Ukraine because of pricing disagreements, but billions of euros will be needed to build and expand alternative routes, and the route of the existing pipeline means transit fees to Slovakia and Bulgaria will have to be paid by Gazprom even if Russia manages to avoid Ukraine by 2020.
• Some analysts doubt Gazprom will succeed in completely bypassing Ukraine by 2020, as it has not yet started laying pipes for the Turkish Stream project and has canceled a contract with Italy's Saipem to build a link to Turkey.