November 08, 2009

Northern Europe greenlights Nord Stream

20:4506/11/2009

MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - November 5 was a major milestone in Nord Stream AG history. Both Sweden and Finland authorized the construction of this seabed gas pipeline in their waters.

There are now no serious obstacles in meeting the deadline to bring the pipeline on line by 2011. The plans to diversify Russia's gas supplies to Europe are beginning to take shape.

The 1,200 kilometer long Nord Stream gas pipeline on the Baltic seabed will link the Russian town of Vyborg with the German town of Greifswald. The first trunkline, with a projected capacity of 27.5 billion cubic meters of gas annually, is due to be completed by late 2011, with the second trunkline of similar capacity planned for 2012. The project operator is Nord Stream AG, in which Gazprom owns 51%, the German Wintershall and E.On Ruhrgas 20% each, and the Dutch Gasunie 9%. In the near future, the French GdF SUEZ may also enter the project.

The Nord Stream pipeline will pass through the waters of Finland, Sweden, Russia and Germany.

It took Nord Stream AG four years to receive construction permits from the countries concerned. The project operator spent 100 million euros on environmental analysis over the entire route.

Nord Stream AG took into account the interests of all parties concerned, changing the pipeline route twice and abandoning its initial plans to construct a compressor station and to lay fiberglass cable.

Denmark was the first country to endorse the pipeline construction in its waters, announcing this decision on October 20. On November 5, Sweden authorised the pipeline installation as well. Stockholm was one of the most obstinate negotiators in the Nord Stream talks, thoroughly reviewing any potential environmental damage for 23 months. The Swedish government placed strict requirements on the project to preserve the fragile environment of the Baltic Sea, but in the end Stockholm stated that Nord Stream AG presented the necessary environmental guarantees.

Upon Sweden's demand, the project operator gave up its plans to construct a compressor station in close proximity to the Swedish coast. The underwater gas pipeline will thus operate without a pumping station which maintains pressure in the pipe, a technically challenging but practicable task.

On the same day, November 5, Nord Stream AG reported receiving a construction permit from the Finnish government. However, permission is only half the battle. According to Finnish law, Nord Stream must receive one more permit, but there is no doubt it will be granted by the end of this year.

The project now needs to be endorsed by Russia and Germany, which is obviously a mere formality.

The northern countries' approval is a great success, which gives grounds for optimism that pipeline construction will start in April 2010 and its first leg will be launched in 2011 in accordance with the schedule.

Russia applied much diplomatic effort to receive the green light from the governments of northern Europe. Zero export duties on round timber for Finland were extended for two years. Russia promised Denmark to sign an agreement at the climate conference, which Copenhagen will host in December. Every Swedish requirement regarding environmental safety was met. For example, Stockholm compelled Nord Stream to terminate the pipeline construction in the cod spawning areas from May until October.

That said, Russia's plans to diversify its gas supplies to Europe, which would increase the energy security of the Old World, and to abolish Ukraine's gas transit monopoly are about to come true.

Russia and its partners dismissed Nord Stream alternatives, which were considered less beneficial
. These include the Yantar/Amber line, which was supposed to be laid across the Baltic states and through Poland, and the Yamal-Europe-2 project, a route through Belarus and Poland.

The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.

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