Gazprom rekindles Baltic pipeline project

Russia's state-controlled gas monopoly Gazprom held talks Nov. 19 with the top German gas group Ruhrgas, a leading shareholder, to discuss plans to build a gas pipeline under the Baltic Sea to supply West European markets.

"The management has decided to launch the North European gas pipeline project to supply gas to the (Russian) enclave of Kaliningrad, Finland, Sweden and Denmark, and it is considering gas deliveries to Britain," a company spokesman said.

"The construction of the North European gas pipeline will allow the link-up of the Russian gas transport system to the European gas network."

Further talks with Ruhrgas will be held early next month, the company said in a statement.

The project, in the works for several years, has been seen as a bargaining chip for Gazprom in talks with Ukraine, Belarus or Poland aimed at obtaining favorable tariffs for the transit of Russian gas through their countries.

Gas deliveries will come on stream in 2007 and full capacity will be reached in 2009, Gazprom said.

"Building the North European gas pipeline will enable us to link the gas transport system from Russia to the European gas network," the group said.

But analysts said that persistent disputes, particularly with Ukraine and Belarus, had prompted Gazprom to go ahead with the project, which is viewed favorably by Europeans.

The project, long delayed because of its cost, has been seen as a bargaining counter that Gazprom has used in negotiations with Ukraine, Belarus and Poland over tariffs for the transit of Russian gas to Western Europe.

Gazprom supplies one-quarter of Europe's gas imports with annual deliveries of about 130 billion cubic meters (4.55 trillion cubic feet), mainly through Ukraine.