The. Offshore Pipeline

Transcription

1 The Offshore Pipeline

2 Contents The South Stream Pipeline System 4 Preparing to Cross the Black Sea 10 Preserving our Surroundings 18 Construction of the Offshore Pipeline 24 Connecting Sea to Land 34 Safe Gas Transports 44 Benefits 48

3 The South Stream Pipeline System The South Stream Pipeline System is one of the world s most important energy infrastructure projects. Thanks to the concerted efforts of energy companies from all over Europe, it will directly connect Central and South- Eastern European consumers to some of the world s largest gas reserves. But South Stream is not just an impressive construction project: it is first and foremost a contribution to securing Europe s future energy supply.

4 46 km South Stream Austria Gmbh 380 km South Stream Hungary Zrt Gazprom OMV 50 % 50 % Gazprom MVM Hungarian 50 % Electricity Ltd. 50% 931 km South Stream Transport B.V. 266 km South Stream Slovenia LLC Gazprom Plinovodi 50 % 50 % 403 km South Stream Novi Sad d.o.o. Gazprom Srbijagas 51 % 49 % 541 km South Stream Bulgaria AD Gazprom Bulgarian Energy Gazprom Eni 50 % 20 % EDF Wintershall 50 % Holding 50 % 15 % Holding 15 % A key supply link for Europe Project Route The South Stream Pipeline System consists of one offshore section and several onshore sections. Gas travelling through this system will begin its journey in the vast reserves of Gazprom s gas grid in Russia. The first section is the offshore pipeline which begins near Anapa, and will run through the Black Sea, crossing Turkish waters before landing on the Bulgarian coast, near Varna. The offshore pipeline will be developed by the international joint venture South Stream Transport. With enough capacity to transport 63 billion cubic metres (bcm) of gas each year, the South Stream Offshore Pipeline will be the largest of its kind. 6 Energy The South Stream Pipeline System 7

5 The next section will be developed by South Stream Bulgaria AD, a joint venture between Bulgarian Energy Holding and Gazprom. It will be responsible for the 541-kilometre pipeline that runs overland through Bulgaria to the Serbian border. From there, one line will head north-west to Hungary before crossing into Slovenia and ending at the border with Italy. The other will travel west through Hungary to the Austrian border. The Serbian section will be developed by South Stream Novi Sad d.o.o., a joint venture of Gazprom and Srbijagas. They will also construct a branch line from Serbia. In total, the South Stream Project brings together nine shareholders in six different joint ventures to help supply gas to consumers across all of South-Eastern and Central Europe. The South Stream pipeline will pump more gas to the Balkans, will increase competition and will be good for Europe Bruno Lescoeur Chief Executive, Edison and Senior Executive Vice President, EDF With enough capacity to transport 63 bcm of gas each year, the South Stream Offshore Pipeline will be the largest of its kind Securing Europe s future gas supply Industry experts are in agreement: in both the medium and long term, the demand for natural gas will grow in the European Union. The International Energy Agency projects annual European demand to climb by 18 % between 2011 and During the same period, EU gas production is set to fall by 38 %. Therefore, Europe needs new gas imports and new supply routes to safeguard its future. Several pipelines already transport gas directly to North- Western and Eastern Europe from Norway and Russia. However, South-Eastern Europe is still poorly connected to the grid. This is where the South Stream System comes in. Capable of delivering 63 bcm of natural gas from Russia directly to the region, it will ensure stable long-term energy supplies. Moreover, by connecting to a series of underground gas storage facilities along the route, as well as the Baumgarten gas hub in Austria, South Stream will strengthen the reliability of the entire European gas grid. Three major facilities are located near the start of the pipeline in the Russian region of Krasnodar, with a planned total storage capacity of over 16 billion cubic metres. In Europe, storage capacity will be available in Serbia (Banatski Dvor, 450 million cubic metres), Austria (Haidach, 2.8 billion cubic metres) and in Hungary, through en extensive network of storage facilities owned by Hungarian MVM. Together, these facilities will provide ample reserves to secure gas supplies all year round, including during unexpected peaks in demand. EU gas Projected demand demand 492 bcm bcm Additional imports needed: bcm Imports South Stream 307 bcm 63 bcm Imports 307 bcm Domestic production 185 bcm Domestic production 114 bcm bcm billion cubic metres. International Energy Agency (2013). Gas: a natural choice for Europe Natural gas is the most ecologically-friendly fossil fuel we have at our disposal. Easy to store and transport, both affordable and abundant, it is the best pairing for renewables as part of a sustainable energy mix. How much is 63 bcm of gas? The South Stream Offshore Pipeline can transport 63 billion cubic metres of gas each year. But just how does it compare to other options? Burning gas instead of oil reduces CO 2 emissions by 20 percent and, if used as a replacement for coal, by percent. Natural gas can be used in a range of applications, from heating to transport - and gas power plants require relatively low levels of investment. Moreover, global gas reserves are estimated to last another 250 years at the current consumption rate, and the bulk of these are located around the European continent. As a result, natural gas has become the natural choice for Europe s energy supply. This is enough energy to fully supply 38 million European households. The power capacity of 49,000 wind turbines. The energy equivalent of 34 nuclear power plants. The amount of gas delivered by almost 700 LNG tankers. As much energy as 450 oil tankers. 8 Energy The South Stream Pipeline System 9

6 Preparing to Cross the Black Sea The offshore pipeline through the Black Sea will form a key link in the overall South Stream Pipeline System. An underwater pipeline has many advantages over other transportation methods and we have designed a pipeline that will be both safe and reliable. The pipeline will set new industry standards in terms of pipe specifications, transport capacity and sea depth, which of course presents a set of unique challenges. Through careful planning and research we have chosen a route which will minimize our impact on the environment and allow safe pipeline installation.

7 Finding new solutions together Maximum Depth, m Offshore length, km The foundations for the South Stream Offshore Pipeline were laid 70 Franpipe in the North Sea, 110 cm in 2007, as Russia s Gazprom and Eni from Italy agreed to work on a new gas supply line to South-Eastern Europe. Feasibility studies for the route began in The following year, French company EDF became the third shareholder, followed by Wintershall of Germany in 2011, when the joint venture South Stream Transport was founded. At its headquarters in Amsterdam, The Netherlands, Maghreb-Europe pipeline in the Mediterranean Sea, 56 cm Nord Stream in the Baltic Sea, 122 cm Langeled in the North Sea, 112 cm South Stream Transport brings together industry experts from all over the world to realize this ambitious project. The South Stream Offshore Pipeline will be laid on the bottom of the Black Sea, as deep as 2,200 metres. At this depth, the Black Sea exerts an immense water pressure of over 2 million kilograms per square metre the equivalent of 12 jumbo jets pressing down on the seabed. In 2012, South Stream Transport commissioned The pipeline will provide reliable gas supplies to companies and households in Central and South-Eastern Europe Dr. Oleg Aksyutin CEO, South Stream Transport B.V. 610 Trans-Mediterranean Pipeline in the Mediterranean Sea, 59 cm INTECSEA B.V. of the Netherlands to design a pipeline system that could transport large volumes of gas across this challenging environment. They analysed the seabed, assessed possible routes and looked at materials and equipment specifications as part 1150 Greenstream in the Mediterranean Sea, 81 cm of the Front End Engineering and Design (FEED) that forms the basis of the Project. The engineers created a solution that addresses both transport capacity and the tremendous external pressure at once. The system was divided across 4 separate gas pipelines, each with a diameter of 81 centimetres. Benefitting from the latest techniques in steel production and high-precision pipe manufacturing, they were able to design strong pipes with a wall thickness of 39 mm. The design allows the production of pipes in the large quantities that are necessary over 300,000 pipes will be used in total. At the same time, the pipeline will not only be strong enough to withstand the high external water pressure, but it can also resist an internal design pressure of 300 bar, thus enabling safe transport of large volumes of natural gas. Smaller gas pipelines have been laid before at depths of over 2 kilometres. For example, the Blue Stream pipeline has been transpor ting gas across the Black Sea from Russia to Turkey Blue Stream in the Black Sea, 61 cm Medgaz in the Mediterranean Sea, 61 cm South Stream Offshore Pipeline in the Black Sea, 81 cm at a depth of 2,150 met res since However, the South Stream Offshore Pipeline will be the first 32-inch sized system to be laid below 2 kilometres of water, bringing with it specific challenges in laying the pipeline and coping with the water pressure. The Project will help push the industry to a new standard 2530 Perdido Norte in the Gulf of Mexico, 46 cm in offshore gas transportation. 12 Planning Preparing to Cross the Black Sea 13

8 Relying on industry experience For the realization of the challenging offshore project, South Stream Transport has one considerable advantage: the experience and expertise of its Shareholders. As an international joint venture, South Stream Transport B.V. combines the strengths of four leading energy companies with proven track records: Russia s Gazprom, Italy s Eni, France s EDF and Wintershall Holding, a subsidiary of the German company BASF. Wintershall and Gazprom worked together on the Nord Stream pipeline across the Baltic Sea, the longest subsea pipeline in the world, which was completed in In 2002, Eni and Gazprom completed work on the Blue Stream gas pipeline, which runs across the Black Sea from Russia to Turkey to deliver 16 bcm of natural gas annually. South Stream Transport employs over 200 people, many of whom have worked on key projects such as these and the company benefits greatly from their knowledge and experience. Finding the best route Advanced subsea surveys High-resolution seismic survey Echo sounding A vessel produces a sonic source A multi-beam echo sounder is used to make a large blast which hits the seabed and propagates under the surface. which bounces back onto the seabed to emit a broad acoustic pulse, Surveyors analyse the return pulse in different ways to reveal the seabed to build up a sub sea- soil accoustic profile. From here, a 3D model image. This helps to analyze the is formed which shows the depth different soil layers of the seabed of the water and shape of the seabed. and is especially helpful in areas were the pipeline will be buried. Sub-bottom profile survey A transducer emits a sound pulse vertically towards the seafloor, then a receiver records the return of the pulse. This technique helps create an image of the layers of sediment or rock under the seabed to determine if it is suitable for pipeline laying. Over 16,500 kilometres of offshore surveys were performed to find the most suitable path to lay the pipeline across the Black Sea. Near the coast, the pipeline runs along the relatively shallow part of the sea called the continental shelf. However, at the so-called continental shelf break the Black Sea suddenly become deeper and the seabed plunges from about 80 to over 1,500 metres deep, creating a considerable challenge for the pipeline route. After assessing different options, a route was chosen from Anapa, in Russia to Varna, Bulgaria. Using modern survey techniques, engineers created a detailed profile of the seabed and analysed the different soil types. On both the Russian and Bulgarian slopes the pipeline route must account for deep canyons. Here, the four pipelines were divided into pairs, to descend down the slopes along a carefully chosen route. In specific areas, techniques such as underwater bridges, cavern fillings or peak shaving will be used to ensure a smooth passage along this difficult stretch. The deep abyssal plain of the Black Sea has its own unique charac teristics. Due to high levels of hydrogen sulphide, there is little to no oxygen below depths of metres and, apart from microbes and bacteria, there is no life in deep waters. However, the route of the pipeline had to take into account other aspects such as possible shipwrecks or objects of historical value, as well as potential fault lines or geological structures. Little was known about the abyssal plain, and a range of survey techniques were applied to map out the best route for the pipeline. Side scan sonar survey Used to create an image of large areas of the sea large areas of the sea floor by scanning up to 500 metres left and right, to investigate any possible obstacles near the route. Underwater filming Using a Remotely Operated Vehicle (ROV), it is possible to film in the deep seas to investigate objects in detail and perform a visual inspection of the route. The ROV can also carry other instruments such as a sonar or a magnometer to ensure all relevant objects are found. Seabed samples Using a range of different techniques, samples are taken from the seabed at different depths. The soil is then analyzed in a laboratory to determine if the seabed is suitable for the gas pipeline laying. 14 Planning Preparing to Cross the Black Sea 15

9 Project timeline Keeping the Project on Track Q Third pipeline operational, total capacity: bcm per year 2009 Start of feasibility studies for the South Stream Offshore Pipeline March 2011 Wintershall from Germany joins the Project The joint venture South Stream Transport is formed June 2013 Launch of tenders for pipe supply and construction December 2015 First pipeline operational: transport capacity of bcm per year Q Fourth and final pipeline con nected, total capacity: 63 billion cubic metres per year June 2007 Italian energy company Eni signs an agreement with Gazprom to join the project First pipeline operational: transport capacity of bcm per year June 2010 EDF from France joins the Project 2012 INTECSEA B.V. appointed for the Front End Engineering and Design (FEED) URS Infrastructure & Environment UK Ltd appointed for the Environmental and Social Impact Assessment (ESIA) November 2012 Final Investment Decision taken December 2012 Joint celebration of the start of the South Stream Project during the Welding the Partnership Event in Anapa, Russia January 2014 EUROPIPE, OMK and Severstal awarded contracts for production of pipes for line 1 DNV-GL assigned for the independent certification of pipeline safety February 2014 Approval of the Bulgarian Environmental Impact Assessment (EIA) March 2014 Saipem contracted for construction of first offshore pipeline March 2014 Marubeni-Itochu & Sumitomo, OMK and Severstal awarded contracts for production of pipes for line 2 Approval of the Russian EIA April 2014 Start of pipe production Allseas contracted for construction of second offshore pipeline July 2014 Approval of the Turkish EIA Onshore construction permit granted in Russia, start of landfall construction August 2014 Conclusion of Public Consultations on ESIA Reports for Russia, Turkey and Bulgaria Q Start of offshore pipe-laying for line 1 Q Landfall construction for all four lines completed in Russia and Bulgaria December 2016 Second pipeline operational: total transport capacity: 31.5 bcm per year 16 Planning Preparing to Cross the Black Sea 17

10 Preserving our Surroundings An underwater pipeline has many advantages in terms of safety and reliability. But what about South Stream Transport is committed to developing the Project in an environmentally and socially responsible manner, in line with national, international, and EU legislation. The Company has invested more than 270 million euros in safe pipeline design, surveys and environmental studies. Moreover, local communities, NGOs, government experts and other stakeholders have been asked to provide feedback during the development of the Project, so that their input could be considered in the design. Our aim is to lay and operate the pipeline with minimum disturbance to the environment and people.

11 Putting the еnvironment first: EIA & ESIA South Stream Transport s approach to protecting marine and animal life and the lives and livelihoods of the people around the Black Sea, is based on two processes: Environmental Impact Assessments (EIA), and Environmental and Social Impact Assessments (ESIA). These studies help us to learn more about the environment and how we can ensure that no significant harm is caused by the Project. The EIA ensures that the Project in line with environmental legislation in Russia, Turkey and Bulgaria. Running in parallel to this is the ESIA, which provides more details on social aspects. Both processes also ensure that the Company meets the expectations of international finance institutions, which are committed to only fund infrastructure Projects that meet high international standards. Altogether, more than a dozen companies and over 80 industry experts are a part of the EIA and ESIA program. How does an impact assessment work? What does the environment currently look like? How will the planned project impact the environment? Will any damage occur? What are the benefits? Working together for responsible Project planning In 2012, South Stream Transport hired URS Infrastructure & Environment from the United Kingdom to carry out the environmental studies as part of the ESIA program. The process started with a scoping stage during which key environmental or socio-economic issues were identified. The result of these preliminary studies were published and discussed with experts and the local communities in Russia, Turkey and Bulgaria. This gave us a better view of the situation, so that all potential aspects could be taken into account in the ESIA process. In the next phase, URS developed detailed EIA and ESIA Reports. These provide a comprehensive assessment of the local environment and the potential impact of the Project. For example, the Bulgarian EIA Report contained over 5,000 pages of data and more than 200 environmental protection measures. South Stream Transport organised another round of public meetings in the region of Anapa in Russia, and around Varna, in Bulgaria, to gather people s feedback on these reports and the pipeline Project. Public meetings were also held in Turkey, where special attention was paid to the fishing industry, as more than 470 kilometres of the pipeline route lie within the Turkish Exclusive Economic Zone of the Black Sea. Based on these studies, numerous protection measures are implemented in the design and construction of the South Stream Offshore Pipeline. As a result, the Project is not expected to have any significant impact on the environment, people s livelihoods or on cultural heritage. The lack of oxygen on the seabed means that even very old shipwrecks may be extraordinarily well preserved Dr. Kalin Dimitrov National Institute of Archaeology ot the Bulgarian Academy of Sciences What can we do to decrea se the negative impacts, and increase potential benefits? Plans are adapted until the Project is no longer expected to have a signi ficant impact on the environment The Project is not expected to have any significant impact on the environment, people`s livelihoods or on cultural heritage 20 Environment Preserving our Surroundings 21

12 Protecting the Environment: 4 Case Studies Protecting the Black Sea s cultural heritage One of the remarkable characteristics of the Black Sea is that there is little to no oxygen below depths of around metres due to high levels of hydrogen sulfide. While this is not good for fish and sea life, it is good news for archeologists. Due to the lack of oxygen and bacteria, shipwrecks and other underwater items of cultural importance barely decay in the deep sees and are often well preserved, even after hundreds of years. South Stream Transport is one of the first companies ever to survey the entire Black Sea bed in a 500-metre corridor spanning an area from the Russian to the Bulgarian shore. These surveys have helped find a number objects of potential cultural importance, including ship wrecks that may date as far back as the late Byzantine period. Where needed, the pipeline route has been carefully adjusted to avoid such sites by at least 150 metres, so that they are fully preserved and may one day help to increase our knowledge of the Black Sea region. Anapa s Nikolsky tortoises and junipers The environmental studies in Russia showed that special attention had to be paid to a number of protected species, including the Nikolsky tortoise population around the Russian landfall and local juniper trees. Before the start of construction activities, we made sure that tortoises were carefully moved out of the construction area to the nearest suitable habitat. Temporary fences were then placed around the building site to prevent the tortoises returning during construction. Underground tunnels are used in key places to allow them safe passage below the construction corridor. For juniper trees, a survey was conducted in December 2013 to find and record the coordinates of protected plants within the construction area. In total, over 200 protected plants were tagged by a special field team. These were then carefully dug out and translocated to another area. Special attention was paid to their size and orientation towards the sun to ensure they were planted properly. Moreover, new junipers will be brought in from a tree nursery after construction is complete to offset the loss of vegetation during construction. In summary, we aim to leave behind more protected trees than we found. Preserving Pasha Dere beach In Bulgaria, the pipeline crosses the beautiful Pasha Dere beach as it reaches land. In line with standard practice, the original design involved digging a trench to lay the pipeline and then bury it and reinstate the beach. This would have closed off large parts of the beach during construction and involved digging up the dunes. During meetings with local communities however, it became clear how important Pasha Dere was, and many people felt that greater care should be taken to protect the beach. Therefore, South Stream Transport opted to change the design and to drill four micro-tunnels more than 20 metres below the surface. This method is more complex and expensive than trenching, but it makes it possible to construct the pipeline without affecting the beach, which will remain open to the public throughout construction work. Anchovy populations in Turkish waters The South Stream Offshore Pipeline passes through the Black Sea at a distance of more than 110 kilometres off the Turkish shore, at a depth of over 2 kilometres. As a result, the pipeline is hardly expected to have notable environmental and social impacts in Turkey. However, during consultations, the fishing communities and experts raised concerns about anchovies. Anchovies migrate around the Black Sea in large schools and are an important stock for the Turkish fishing industry A fisheries study was conducted with the help of fishery cooperatives and academic experts in Ankara, Trabzon and Samsun to examine the migratory routes of commercially important fish species. The study concluded that the pipeline will not impact fish migrations. For example, anchovies migrate across a very large area in a corridor about 125 kilometres wide in fast-moving schools. The construction vessel, which only moves at a speed of roughly 2.75 km a day, will hardly affect this migration. Any noise generated from the vessel would only stretch to approx. 500 metres and anchovy schools can easily avoid this radius, as they would with other large vessels in the Black Sea. The findings of the study were included in the Turkish ESIA Report which was presented to stakeholders in July Environment Preserving our Surroundings 23

13 Construction of the Offshore Pipeline Engineering design, route surveys and the environmental studies form part of the ground work for the construction of the South Steam Offshore Pipeline. In the next phase, over 300,000 pipe joints will be produced, fabricated and individually tested. The pipes are welded together onboard specialized pipe-laying vessels, and laid on the bottom of the Black Sea in four strings of 931 kilometres each. Our engineers have teamed up with the best manufacturers to ensure that the pipes are strong enough to withstand the high water pressure at bottom of the Black Sea and some of the world s biggest pipe-laying vessels are involved in offshore construction. To ensure safety, our construction processes are not only monitored by our own inspectors but also by third-party experts, to ensure best practise at all times.

14 Quality pipes through rigorous selection When complete, the South Stream Offshore Pipeline will consist of four parallel pipelines, each capable of delivering billion cubic metres (bcm) of gas to Europe each year. A single line will be constructed from over 75,000 individual pipe joints. Each pipe joint has an external diameter of about 81 centimetres and weighs in at around 9 tonnes. The walls of the pipeline are made up of almost four centimetres of high-quality carbon manganese steel. During production, the steel is heat-treated to improve the mechanical characteristics of the pipe that are required to withstand the huge external pressure. Pipes laid closer to the shore are coated in concrete for added stability and protection against marine activities. The pipe manufacturers had to undergo a rigorous selection process to prove that they were up to the job. To qualify as a supplier for South Stream Transport, a company has to produce multiple samples of pipe according to our exact specifications. The samples are then judged on their quality and strength, whereby the utmost utmost attention is paid to the precision of the manufacturing process. Moving into the production phase, the process is no less stringent. Each pipe is repeatedly measured and inspected using ultrasound and x-ray scans to rule out defects. Before it leaves the factory, each pipe is filled with water at a high pressure to verify whether it is genuinely strong enough to form part of the South Stream Offshore Pipeline. In addition to experienced factory supervisors, third-party inspectors are on hand to examine and certify the quality of the fabricated pipes. We have monitored production in recognized pipe mills and tested more than 100 sample pipes to determine which producers are qualified Grégoire Richez Commercial Director, South Stream Transport B.V. Cross-section of a single pipe External coating of three-layer polypropylene against corrosion Concrete coating Internal epoxy coating against friction Pipes laid in shallow waters are coated with 5 to 8 centimetres of concrete for additional stability Steel pipe wall 3.9 сm Each pipe joint has an external diameter of about 81 cm and weighs in at around 81.3 cm 9 tonnes 1,200 cm 26 Technology Construction of the Offshore Pipeline 27

15 From pipes to pipeline Our work will be monitored from start to finish by the world s leading offshore classification society DNV GL Stringent safety and certification From our earliest project drafts and designs, all the way to the hard work of constructing and operating the offshore pipeline, safety and reliability remain our top priorities. Our first surveys laid the foundations for this, as we identified a secure route that avoided difficult terrain and sensitive areas. Material and process standards are also integral to our project and we have a commitment to testing each joint of the pipe before it goes into the water. During pipe fabrication, our engineers are on hand to oversee each stage of the process at the manufacturers facilities. But when it comes to quality and safety standards, don t just take our word for it: our work will be monitored from start to finish by the world s leading offshore classification society DNV GL. This independent Norwegian foundation specializes in verifying and safeguarding the quality of key maritime infrastructure projects throughout the world. DNV GL experts validate the entire pipeline design and inspect fabrication, laying and pre-commissioning works. They are present at the factories and onboard the vessels to perform specific checks of bevelling, welding, non-destructive testing, field joint coatings and installation parameters. Inspectors make sure the lay corridor is correct and review our data. When DNV GL is satisfied that its high standards have been met it issues a Certificate of Conformity which shows that the pipeline complies with the DNV-OS-F101 code. These measures ensure that the pipeline is safe and ready for operations. After production, the individual pipes are brought to storage yards at the harbours of Varna and Burgas, in Bulgaria. From there, they are directly transported by ship to a special pipe-laying vessel. The Italian company Saipem, which also constructed the Blue Stream and Nord Stream pipelines, has been contracted to construct the first pipeline. It provides two specialized vessels for the task: the Castoro Sei and Saipem S7000. Line 2 will be laid by Allseas, which will deploy the world s largest pipe-laying vessel, the Pieter Schelte. This newly developed vessel has a total length of 455 metres and a main firing line featuring six welding and coating stations. On board, the pipe joints are aligned and welded. Each weld will be scanned with an automatic ultra-sound system, allowing for even the slightest defect in the joint to be detected. Additionally, polypropylene coating protection will be applied on the welded area for protection against external corrosion. The newly welded, coated and inspected pipeline section is then lowered into the water. Slowly but surely, the pipe-laying vessel will traverse the Black Sea adding new sections to the pipe string as it moves. Operating around the clock, these vessels typically lay as much as 3 kilometres of pipeline each day. Pipes for the South Stream Offshore Pipeline are stored at the Port of Burgas before being welded together offshore 28 Technology Construction of the Offshore Pipeline 29

16 Construction of an offshore pipeline J-Lay With this technique, the pipes are welded vertically in a tower and then lowered into the sea in the shape of a large J. This method can only be used in deeper waters. Welding station Beveling station 1. Pipes are supplied to the vessel continuously from storage yards on the Bul garian coast. 2. On board, the pipe ends are bevelled to prepare them for welding. J-lay tower to load quad-joint pipes of 48 metres Accommodation for crew of 725 Non destructive testing and field joint coating 3. The pipes are welded to the main string with high precision by automated machines. 4. The welds are scanned with ultra-sound to verify there are no defects. Capacity to store over 600 pipes 5. A coating is applied to fill the joint and provide extra protection. Overall length: m Breadth: 87 m Depth to main deck: 43.5 m Touch down monitoring by ROV 30 Technology Construction of the Offshore Pipeline 31

17 S-Lay Using this method, the pipes are welded together horizontally, and then lowered on the seabed in an S shape. This method can be used in both shallow and deep waters. Double-joint factory with 2 welding stations to connect 12 meter pipes together Pipe conveyors transfer double joint pipes to the removable bevelling station, from where they enter the main firing line underdeck Accommodation for crew of 571 Removable bevelling station Length overall (including stinger): 445 m Breadth: 124 m Depth to main deck: 30 m Cargo capacity to store up to 3,000 pipes Pipelay stinger/ramp Line 2 will be laid by the world s largest pipe-laying vessel: the Pieter Schelte 32 Technology Construction of the Offshore Pipeline 33

18 Connecting Sea to Land The subsea section of the South Stream Offshore Pipeline will connect to onshore facilities near the coast in both Russia and Bulgaria. As the pipeline approaches these landfall sites, our priority is to preserve the shore areas and to ensure the system can operate safely. The pipeline will cross the shore on both sides of the Black Sea through underground micro-tunnels. This will greatly limit disturbances to the surface areas above. When both these shore crossing sections and the subsea stretch of the pipeline are complete, the separate components are welded together using a so-called above-water tie-in procedure.

19 Approaching land For most of the offshore route, the pipelines will rest deep at the bottom of the Black Sea. But in shallower coastal waters there can be a stronger current on the sea bottom, in addition to potential disturbances from anchors or fishing boats. For added protection at these locations, we coat the pipeline in 5 to 8cm of heavy-weight concrete. Moving even closer to the shoreline, sections of the pipeline will be installed in trenches entirely below the seabed. The trenches will be at least 2.5 m deep and the excavations are carefully covered over again after the pipeline is laid. But to cross the shoreline in both Bulgaria and Russia, a more advanced solution was applied. Crossing the shore via micro-tunnels The Russian and Bulgarian landfalls are both ecologically exceptional in their own way. In Russia, the route arrives at particularly steep, rocky cliffs along the coastline, running behind a narrow stretch of beach. In Bulgaria, the four pipelines come ashore at the beautiful sandy Pasha Dere beach, some 10 kilometres from the city of Varna. Our engineers developed a solution to cross the shorelines without impacting the surface, using so-called micro-tunnels. This method is slightly more complex and expensive Side view of pipeline than the more traditional way of excavating an open trench to bury the pipes, but it ensures installation of the pipelines without any construction work on the beach itself. Four small tunnels will be drilled under the shore to accommodate the pipeline. In Russia, these will have a length of about 1.4 kilometres and in Bulgaria, they are just over a kilometer long. To construct a micro-tunnel, an entry pit of about 10 metres is excavated. Then, an automated boring machine starts drilling a small tunnel, guided remotely from a container cabin next I have visited Pasha Dere beach in Bulgaria many times for this project. It is a beautiful beach and we are working very closely with South Stream so that it stays that way! Antonio Santaniello Project Manager, URS, Environmental Consultants to South Stream Transport to the entry pit. During drilling, an experienced operator will carefully guide the machine, taking into the account the different types of soil to maintain the correct path. Behind the automated boring machine, pre-fabricated concrete segments are inserted Compressor station (South Stream Bulgaria AD) Bulgaria Landfall Facilities Bulgarian - Turkish EEZ Boundary Turkish - Russian EEZ Boundary Russia Landfall Facilities Compressor station (Gazprom) to provide stability and form a tunnel. An exit pit is excavated in the sea at the end of the tunnel and when the boring machine emerges into the pit, it is retrieved by a vessel. Afterwards, the pipelines themselves are pulled through the tunnels. The pipe is prepared onboard a pipe-laying vessel, where individual pieces of pipe are welded together into one string. As the Underground pipeline Microtunnels Pipeline buried in shallow waters Black Sea 2.2 km Microtunnels Pipeline buried in shallow waters Underground pipeline pipe becomes longer, it will be pulled slowly through the micro-tunnel by an industrial-sized winch located onshore. Once this stage is complete, we will refill and reinstate the entry and exit pits of the tunnel. At both the Russian and Bulgarian shores, the pipeline will run deep under the surface, out of sight and earshot of local residents. Deep-water pipeline Approx 230 km Approx 470 km Approx 230 km 36 Key Link Connecting Sea to Land 37

20 Example of micro-tunnel construction in Bulgaria 1. An entry pit of about 10 metres in depth is excavated. 2. An automated tunnel-boring machine starts drilling a small tunnel. 3. Pre-fabricated concrete segments are pushed into the tunnel to provide support as it gets longer. 4. The tunnel ends about metres offshore, at least 3 metres under the natural seabed. 5. After the tunnel is completed, the pipeline is pulled through the tunnel. Onboard a pipe-laying vessel, individual pieces of pipe are welded together into one string. As the pipe becomes longer, it is slowly pulled through the tunnel by a large winch located onshore. 450 m 580 m South Stream Transport engineers developed a solution to cross the shorelines without impacting the surface, using so-called micro-tunnels 38 Key Link Connecting Sea to Land 39

21 Landfall facilities The South Stream Offshore Pipeline is connected at both ends to underground pipeline systems via landfall facilities. At these facilities, we will closely monitor the temperature, pressure and composition of the gas, ensuring both quality and environmental safety. In Russia, we will measure how much gas goes into the pipeline, while metering systems in Bulgaria track how much gas is transferred out of the offshore section and into the underground pipelines of South Stream Bulgaria AD. In Bulgaria, the pipelines will run parallel to the existing Galata pipeline. Some two kilometres inland, they will connect to the project being developed by South Stream Bulgaria AD after passing through landfall facilities. Our staff closely observe gas flows into the pipeline from a central control room 24 hours per day. In case of emergency, shutdown valves can safely stop all gas flows into the pipeline system. The landfall facilities will also serve as a base for maintenance operations. In addition to regular on-site checks and testing, a full inspection of the pipeline will take place approximately every five years. During these checks, South Stream Transport will send special pipeline inspection gauges (PIGs) through the pipes all the way from the landfall facilities in Russia to Bulgaria to check the pipeline from within. At the Russian coast, close to the city of Anapa, the South Stream Offshore Pipeline will connect to Gazprom s extensive Russian gas network, providing direct access to the country s vast gas reserves. Gazprom will expand its supply capacities to guarantee sufficient gas deliveries to the South Stream Offshore Pipeline. Here, Gazprom will also construct the Russkaya compressor station, an advanced compression facility designed to provide the pressure needed to transport gas 931 kilometres across the Black Sea. South Stream Onshore Pipeline Bulgaria Compressor station South Stream Offshore Pipeline Micro-tunnels Landfall facilities South Stream Onshore Pipeline Bulgaria Shut-down valves Metering equipment South Stream Offshore Pipeline Micro-tunnels Landfall facilities Receiving terminal Galata Pipeline Existing Galata processing plant National Protected Area Lines coming from the South Stream Offshore Pipeline Entry point for Pipeline Inspection Gauge (PIG) South Stream Onshore Pipeline Russia Gazprom United Gas Supply Lines Gazprom Russkaya CS Maintenance and staff buildings, control room Venting tower (in case gas release is required) Lines coming to the South Stream Offshore Pipeline 5 40 Key Link Connecting Sea to Land 41

22 Preparing for operations After the landfall sections are completed, the pipelines must pass a series of pre-commissioning tests. First, we use pipeline inspection gauges (PIGs) and treated seawater to clean and gauge the pipeline. Afterwards, the pipelines are filled with water to a pressure well in excess of the design limit in order to test the strength of the pipeline and check for any leaks. If the test is successful, the pipelines will be dewatered and then dried. Once pre-commissioning is complete, the near-shore sections are connected to the deep-water strings of the pipeline to form a single, continuous pipeline. This is done using an above-water tie-in process. Divers attach cables to the separate lines which are then hoisted out of the water by cranes mounted on a barge. The two lines are then aligned on a platform and cut horizontally at one point. Construction staff then bevel each end to facilitate a smooth connection. Finally, the two pipes are welded together and the weld is tested with ultrasound before the joint is lowered into the water and the pipeline is completed. Underground connections The landfall facilities and the underwater pipeline will be connected by a short section of underground pipeline 2-3 kilometres in length. These underground sections of the South Stream Offshore Pipeline will be constructed in several stages. 2,0 m 1. A strip of land metres wide 2. The top-soil will be stored so that 3. Trenches are dug at a depth will be temporarily cleared to serve it can be put back in place after of at least 2 metres. as a construction corridor. construction. 4. Individual pipes are laid out and bent into shape if needed. 5. The pipes are welded together. 6. All welds are inspected using ultra sound. Once pre-commissioning is complete, the near shore sections are connected to the deep-water strings of the pipeline to form a single, continuous pipeline 7. The pipe is lowered into the trench. 8. The pipe is buried at a depth of at least 1.5 metres. 9. The original top-soil is restored. 10. New vegetation will be planted in the construction corridor. A strip of about 80 metres above the four pipelines will be designated a Right of Way area, where deep-rooting vegetation such as trees should not grow, though small plants such as vines could be planted. 42 Key Link Connecting Sea to Land 43

23 Safe Gas Transports Upon completion of the fourth line in 2017, the South Stream Offshore Pipeline will enter its operational phase. Advanced control and monitoring systems will be established at both ends of the pipeline before the Project is brought into service. Gas pressure, temperature, flow, and composition will be closely watched at the landfall facilities, with additional remote monitoring of the overall pipeline system from a central control room in Amsterdam. These systems will ensure the safe and reliable passage of natural gas to European homes and businesses, seven days a week, 24 hours a day.

24 Central control for safe operation High-pressure gas transports Offshore gas pipelines are an inherently safe means of transporting energy: large-diameter pipelines have been operating safely since as far back as the 1950s. At South Stream Transport, we aim to maintain this record through stringent monitoring of our offshore pipeline. Day-to-day operations of the South Stream Offshore Pipeline will be managed from a central control room in Amsterdam, The Netherlands. That system will be connected to the landfall sites in Russia and Bulgaria, where the underwater and onshore sections of South Stream meet. The landfall sites feature metering equipment, Emergency Shutdown (ESD) valves, block valves (three per pipeline), fire and gas detection systems and other auxiliary The pipeline will be monitored from systems for safeguarding the stability and safety of gas transport. a control room, similar to this one used for the Nord Stream Pipeline. Two independent communication links will connect the equipment in Russia and Bulgaria with the central control room, and Image courtesy of Nord Stream AG. a satellite link will provide a backup. In addition, a fully-functional centre will be established at a nearby location to take over in case of unforeseen problems. Our control room operators will be in constant contact with the gas supplier and operators upstream in Russia and downstream in Bulgaria. Sensors and valve technology allow for the automatic shut-down of the gas flow, should an emergency arise. In such instances, the valves cannot be opened again until our engineers have checked the problem and returned the pipeline to its normal operating conditions. The gas flow will also be monitored. Operations of the South Stream Offshore Pipeline will be managed from a central control centre in Amsterdam, The Nederlands When fully operational, each of the four offshore pipelines can transport up to billion cubic metre (bcm) of gas per year 63 bcm in total. This is the equivalent of more than 40 million cubic metres of gas flowing through each pipeline per day. The pressure required to transport these vast amounts comes from the Russkaya Compressor Station in Russia, which is built and operated by Gazprom. The pipeline is built to withstand an internal pressure of up to 300 bar, called the design pressure. However, the actual operating pressure will be somewhat lower, to allow for an additional safety margin. At the inlet in Russia, gas is pumped in with a maximum pressure of about 284 bar. The offshore pipeline operates without any interim compressor stations, so the pressure drops steadily during the 931-kilometre journey. Once it reaches the Bulgarian landfall facilities, the operational pressure will be less than 100 bar. Inspecting the pipeline for safety and reliability We will implement an inspection plan to ensure that the pipeline, once fully operational, is functioning safely and reliably. The condition of the subsea pipeline will be monitored on a regular basis using Remotely Operated Vehicles (ROVs) equipped with sonar scanning devices and visual inspection cameras. This technology allows us to scan the pipeline exterior for any signs of damage. We will also check the pipeline from the inside, by running pipeline inspection gauges, or PIGs, through it. The PIGs enter the pipeline at the Russian landfall facilities and are propelled by the gas flow towards the landfall facilities near Varna, where they are removed via special PIG receivers. Critical sections of the pipeline route, including slopes, trenches, anomalous seabed areas, and the continental shelf break, will be surveyed more frequently: first annually, and then as often as necessary based on monitoring results. No repairs are expected during the pipeline s 50-year lifespan, but an emergency maintenance plan is in place so that we can act immediately and effectively if called for. Each part of the pipeline is designed, and will be developed, to ensure safety Andrey Fick Technical Director, South Stream Transport B.V. Pipeline Inspection Gauge (PIG) 46 Operations Safe Gas Transports 47

25 We are fully supporting the project. It strengthens supply security in Europe and is economically and technically feasible. Dr. Rainer Seele, Chairman of the Board of the Executive directors of Wintershall Securing Europe s future energy supply Natural gas is the best choice for securing Europe s future energy prospects. It is climate-friendly, efficient, and abundant. Not surprisingly, EU natural gas demand is projected to rise from its 2009 level of 508 billion cubic metres (bcm) to 626 bcm in At the same time, European production is expected to fall by almost 50 % in the coming two decades. With an annual capacity of 63 bcm of natural gas sourced directly from Russia s vast gas reserves, South Stream is a key infrastructure project in tackling Europe s looming supply shortage. Experienced shareholders and industry experts With the vast experience and proven track records of its Shareholders ENI, EDF, Wintershall and Gazprom, South Stream Transport is in a unique position to build the ambitious deep-water pipeline in a safe and responsible way. Furthermore, we have commissioned the services of a range of experienced firms such as the Dutch company INTECSEA, DNV GL of Norway, Saipem of Italy, Swiss-based Allseas and URS Infrastructure and Environment from the UK. They will help us implement the Project in a safe, responsible way. Cutting emissions and bridging to renewables The South Stream System will help EU member states to meet their CO 2 reduction targets. Market studies have shown that increasing the share of gas in the EU energy mix by only 1 %, with a similar reduction in coal, can reduce CO 2 emissions by 3 %. In addition, natural gas is the ideal fuel for use alongside alongside renewables, as it provides an affordable and flexible source of power during periods when solar or wind energy may be low. Putting the environment first Environmental planning and protection form an integral part of the South Stream Offshore Pipeline. Our EIA and ESIA studies ensure that the project complies with national legislation in Russia, Bulgaria and Turkey and the rigorous standards set by international finance institutions. South Stream Transport has commissioned independent ecologists to study plants, birds and other wildlife along the pipeline route and to provide us with the information we need to avoid damaging unique and ecologically important habitats. In addition, we have held meetings with local communities, NGOs, government experts and other stakeholders to help us understand and address the concerns of onshore residents. Local investments and job creation As part of the South Stream Project we will make considerable financial and infrastructural investments and create important opportunities for local communities. The entire South Stream Project will create around 10,000 employment positions across Bulgaria, Serbia, Hungary, Slovenia, Austria, the Netherlands and Russia. Total investment in local economies will reach over 16 billion euros. The majority of this funding will come from the group of international energy companies involved in the Project as shareholders and from international banks who seek to invest in a long-term infrastructure project such as South Stream. Setting new standards The technical and material specifications of our pipeline are setting new standards for the gas transport industry. The South Stream Offshore Pipeline will be the largest system ever to be laid at depths as low as 2,200 metres. To ensure that the highest international standards are maintained from one end of the pipeline to the other, inspectors from Norway s DNV GL are on hand to perform rigorous third-party checks. Their staff are present onboard vessels, in pipe mills and on coating yards to ensure best practices are met. 48 Benefits Benefits 49