Nord Stream clears final hurdle

TALLINN - Russia’s Gazprom, the world’s largest natural-gas producer, received its final permit, which gives it the go-ahead to build a 7.2 billion euro pipeline connection to Germany, making this its first direct link to Western Europe, reports Bloomberg. A Finnish regional agency on Feb. 12 approved Nord Stream’s construction plan for the pipeline under the Baltic Sea. Gas delivery is expected starting next year. The Zug, Switzerland-based venture with Wintershall, E. ON Ruhrgas and the Dutch Nederlandse Gasunie earlier secured other necessary permits from Finland, Russia, Germany, Sweden and Denmark.

Baltic Sea countries are voicing concern over the pipeline’s environmental impact while Poland, which currently transfers about a fifth of Russia’s gas to Europe, compared the project to the Molotov-Ribbentrop Pact that divided Europe before World War II. The new link will bypass Ukraine, reducing the risk of supply cuts that hit Europe last winter. “In general, approvals and discussions were objective, although excessively politicized,” says Alexei Knizhnikov, an oil and gas program coordinator at WWF Russia. “The process that has just been completed doesn’t remove all potential threats and issues at the implementation stage.”

Baltic Sea littoral countries have said the 1,220-kilometer pipeline may damage the environment. Nord Stream has changed the proposed path to allay these concerns, moving the route north of the Danish island of Bornholm, and farther from nature reserves near the Swedish island of Gotland. “We still have some doubts” over the project’s impact on the environment, says Estonia’s Prime Minister Andrus Ansip on Feb. 10. “The concerns of Estonian scientists have not been adequately answered.”
The World Wildlife Fund and Friends of the Earth Germany have issued a civil lawsuit against the plans, claiming that the project will cause greater environmental damage than the Nord Stream company asserts, reports dwelle.de.

More than 150,000 mines were deployed and disposed of in the Baltic Sea during and after the two World Wars, according to Nord Stream. The company plans to bypass the munitions in some locations or remove them in others. “It’s the biggest man-made construct in the Baltic Sea,” said Tapani Veistola, an officer at the Finnish Association for Nature Conservation. “The main problems are the nutrients and heavy metals spread during construction; there is no plan for dealing with the pipeline after it’s no longer in use.”

Nord Stream will build two parallel pipelines on the Baltic seabed, starting from the Russian city of Vyborg near the Finnish border and terminating in Greifswald on the Baltic coast in Germany. The conduit’s first line may start operating in September 2011, according to Russian Prime Minister Vladimir Putin. The first link will ship 27.5 billion cubic meters a year, or about a third of Germany’s gas consumption. The second pipe is to double capacity in 2012.

“We passed a tight screening,” said Nord Stream permitting manager Sebastian Sass. “This is an important day for European environment and the security of energy supply in Europe.” The project is on budget and construction is set to start in April as scheduled, Sass said. Pipe-laying will begin in the middle of the Swedish sector, he said.
This final permit was the third hurdle for Nord Stream in Finland, after an environmental report found the project feasible and the government approved use of the country’s economic zone. “Work on the pipeline may begin immediately and any complaints must be registered within 30 days,” said the Southern Finland Regional State Administrative Agency in Helsinki, which granted the permit.

Gazprom aims to expand its share of the European gas market, from about 25 percent now to 30 percent in 2015. The company’s export arm has contracted 22 billion cubic meters of gas deliveries via the pipeline, said Nord Stream Finance Director Paul Corcoran in December.

The EU has sought more reliable imports of gas after shipments through Ukraine were halted twice in the past four years. A disagreement between Ukraine and Russia over gas prices and transit fees disrupted Gazprom supplies to 20 European countries for almost two weeks in freezing temperatures in January 2009.
Ukraine’s President-elect Viktor Yanukovych has vowed to maintain transit volumes via his country, and has said Ukraine should join Nord Stream. Before the elections, he said “If I win the elections, I will propose that Ukraine joins the consortium that is now constructing Nord Stream.”

Gazprom owns 51 percent of Nord Stream, Wintershall and E.ON Ruhrgas each have 20 percent and Gasunie has 9 percent. GDF Suez SA, owner of Europe’s biggest gas network, has been in talks on joining the project. Nord Stream expects to borrow 3.9 billion euros from 27 banks this year to finance construction, said Corcoran.
Germany, Denmark and Russia will benefit from transit fees, as the pipe runs through their territorial waters. Sweden and Finland will not, as in their cases the pipe runs through their exclusive economic zones. According to international law no transit duties can be imposed there.

Polish Foreign Minister Radoslaw Sikorski, while serving as defense minister in an earlier government, in 2006 compared the Nord Stream project to the Molotov-Ribbentrop treaty that split Eastern Europe between Nazi Germany and the Soviet Union before World War II.

The pipeline may be preferable to ships for fuel supply, Finland’s Veistola said. “The Gulf of Finland is already full of ship traffic,” he said. “We’re living on borrowed time. Statistically speaking, there should already have been a major oil or chemical spill.”
According to Sass, Sweden and Finland will benefit from the fact that this pipeline is much more secure than others in transporting gas, reports rzd-partner.com. “If the same amount of gas were to be transported in LNG tankers, it would fill 600 tankers a year,” he said.