Nord Stream construction starts

TALLINN - Russia’s gas giant Gazprom on April 6 finally launched construction of the Nord Stream pipeline project, which will carry gas from Russia to the European Union under the Baltic Sea, reports news agency LETA. This first phase of the project is being carried out in the Swedish Exclusive Economic Zone. The start of the first of two planned parallel pipelines was marked by an official ceremony on April 9, with Russia’s President Dmitry Medvedev in attendance.

Nord Stream plans to build this 1,220-kilometer pipeline at a cost of 7.4 billion euros. The project is led by Gazprom, with a 51 percent stake, in partnership with Germany’s E.On Ruhrgas and BASF-Wintershall, each with a 20 percent share, and the Dutch gas infrastructure company N.V. Nederlandse Gasunie with a 9 percent stake. It will link the Russian city of Vyborg and Greifswald in Germany, running under the Baltic Sea and passing through Russian, Finnish, Swedish, Danish and German waters.

A quarter of the gas consumed in the European Union currently comes from Russia.
The global economic crisis hasn’t affected the project’s final cost, said Nord Stream’s Baltic states representative Roman Baumanis. He said that the crisis influences the costs in both directions, that is, some costs have dropped, while others have risen. “Financing has gotten more expensive, but steel prices have dropped. Savings have also been found through changes in the engineering design. It was originally planned to build a service platform in Swedish waters, which caused quite a lot of discussion. In re-assessing the engineering side, we came to the conclusion that this platform could be eliminated. Its removal [from the plan] reduced some political tension, and also saved a lot of money,” said Baumanis.

Nord Stream, in an April 9 press release, announced that construction commenced with the laybarge ‘Castoro 6’ (C6) starting to lay the offshore pipes near the island of Gotland, at a distance of 675 kilometers from the pipeline’s starting point near Vyborg, Russia. “The first two kilometers of the Nord Stream pipeline are laid,” said Project Director Henning Kothe. “Now we are finally making our project a reality. During the permitting phase, we have shown that we are planning for a technically and environmentally safe project; now we will live up to our plans and create the infrastructure that secures Europe’s gas supply for years to come.”

Starting in 2006, the Swiss-based consortium has claimed that it has thoroughly planned out “one of Europe’s largest infrastructure projects.” The pipeline will, when completed, transport 55 billion cubic meters of natural gas annually to Europe.

The company says that before construction could start, Nord Stream underwent a permitting process involving all nine countries on the Baltic Sea coast. Detailed cross-boundary and national environmental impact assessments were carried out, based on detailed studies of the Baltic Sea region. Consequently, it says, pipe-laying procedures and sequences as well as an environmental monitoring program were developed to meet environmental requirements, while allowing the construction vessels to work efficiently.

Throughout the project, a number of vessels will be used for different activities, such as pipe supply, surveying, or anchor handling. The pipe laying itself will be carried out by three lay barges: Saipem’s Castoro Sei for most of the offshore construction, the Castoro Dieci, near the German shore (from June 2010) and Allseas’ Solitaire in the Gulf of Finland (starting in September 2010). Each of these ships is a floating factory: working continuously, 12 meter long and about 25 ton concrete-coated steel pipes will be supplied from five stock yards located along the Baltic Sea coast. On board, the pipes are beveled and welded together to form the pipeline. Before they are lowered into their designated position on the seabed, each weld will be subjected to ultrasonic testing, inspecting for poor joints. Each pipeline has an inner diameter of 1.153 meters.

The group’s project managers point out that the European Union’s annual natural gas imports in 2007 were approximately 312 billion cubic meters (bcm) and are projected to increase to 516 bcm by 2030. This means that by 2030, the EU’s annual import needs will have increased by about 200 bcm. Nord Stream should meet about 25 percent of this additional gas import requirement. The project, they say, will be an important contribution to long-term security of supply and a milestone of the energy partnership between the European Union and Russia.

Opposition groups to the project have, however, so far failed to stop its progress. Baltic Sea countries have voiced their 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.

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 project has been designed to bypass the munitions in some locations, or to 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.”

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.
Germany, Denmark and Russia will benefit from transit fees, as the pipeline runs through their territorial waters. Sweden and Finland will not, as in their cases the pipeline runs through their exclusive economic zones. According to international law, no transit duties can be imposed there.

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 has previously warned. “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.