Gazprom has terminated the contracts for the supply of pipes for the onshore section of the gas pipeline Nord stream-2, considering their cost too high. This is with reference to sources in the pipe industry, Russian Federation, Vedomosti said.

Letters of notification of termination of contracts about the pipe, the company received 20 Dec. The sender of letters, OOO Gazprom komplektatsiya, which acted as the customer in these pipe contracts. The order to terminate the contracts was signed by the head of Department for corporate expense management of Gazprom Mikhail Sirotkin.

The purchase, referred, Gazprom komplektatsiya announced 19 APR 2016: anticipated delivery 501,6 thousand tons of large diameter pipes for the project development of a unified gas supply system of the North-Western region, the site Gryazovets compressor station Slavic. Meant the extension of the pipeline under gas supply to the gas pipeline Nord stream-2.

Length of the ground part of the project is 876 km, for terminated contracts was to be delivered nearly 670 km of pipes. How many of them have already been delivered, Gazprom and pipe companies are not misleading.

The total value of the contracts amounted to 56.8 billion RUB.

How to write Vedomosti, the cause and catalyst for the termination of contracts could be the emergence in the Russian pipe market a new player – the Zagorsk pipe plant, launched in 2015, According to the source, ZTZ offered to supply pipes to Gazprom for 20-25% cheaper. The factory has a contract with Gazprom on 112 thousand tons, but it can produce 500 thousand tons per year.

“Prices in 2016 have gone down, and pipe manufacturers are trying to pretend that the current market conditions and the recent agreement this supply does not relate to. We have to educate,” said a source in Gazprom.

See also: Nord stream-2 will be deadly for Ukraine Prime Minister of Poland

After the devaluation of the ruble in 2014 are pipe manufacturers and Gazprom started to have problems – steel, coal and pipes in rubles rose: prices are pegged to the dollar prices in the international markets. In early 2015, the parties agreed to revise the prices every quarter, and expect it on a formula which included prices for coking coal, iron ore, gas and oil and the dollar.

Project Nord stream-2 involves the construction of two pipelines to bypass Ukraine with a total capacity of 55 billion cubic meters of gas off the coast of Russia through the Baltic sea to Germany. Nord Stream AG 2, dealing with construction planning, belongs to the Russian Gazprom for 100%. Earlier it was reported that half the cost of the pipeline to Fund five European oil and gas companies – Shell, OMV, Engie, Uniper and Wintershall.

November 30, 2017, the Danish Parliament adopted a law that prohibits the passage of the Russian gas pipeline Nord stream-2 through its territorial waters.

At the same time, the authorities of the German Federal state of Mecklenburg-Western Pomerania approved the construction of the gas pipeline Nord stream-2.

Gazprom has terminated the contracts for the supply of pipes for Nord stream-2 21.12.2017

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