Nord Stream work gets going after 5-year battle (News Feature)

By Ulf Mauder and Martina Rathke Apr 6, 2010, 19:42 GMT

Moscow/Greifswald - After five years of tough wrangling, energy giant Russia is now launching Europe's largest-ever energy project, the Baltic Sea gas pipeline Nord Stream.

Tuesday evening, the project leader, gas monopoly giant Gazprom, disclosed that the first pipes had already begun to be laid.

On April 9, ceremonies in Wyborg will officially launch construction work on the 1,220-kilometre pipeline running under the Baltic Sea and connecting with Lubmin, near the north-eastern German town of Greifswald.

It will be an occasion for Russian Prime Minister Vladimir Putin to meet up with his old pal, former German Chancellor Gerhard Schroeder, to celebrate.

The two had agreed on the Nord Stream project back in 2005 and then managed to push it through despite criticism from the Baltic states and Poland.

Germany, as well as the European Union as a whole, expect the 7.4 billion euro (10 billion dollars) project to provide more energy security. Russia expects to earn big money in quenching the rising energy needs of the EU.

When the gas starts flowing through the pipeline to the EU at the end of 2011, it should mean the end of the series of energy crises such as those related to the disputes involving Ukraine, which is currently the most important transit country for Russian gas.

The Ukraine will remain a major transit route, but its reputation has been tarnished by the 'gas wars' which in January 2009 went so far as to leave many people in Eastern Europe in the cold because Moscow shut down deliveries in a dispute with Kiev over transit fees.

Since Viktor Yanukovitch's election as president in Ukraine, the climate has improved between Moscow and Kiev. But financially- stricken Ukraine must still undertake a thorough overhaul of its ageing pipeline network.

But so far no plans are in sight for such an overhaul which would run into the billions of euros.

In view of such problems in the Ukraine, Russia decided to pursue the idea of a Baltic Sea pipeline, all the worries of environmentalists notwithstanding.

Backing for 'Gas-Putin' - as Moscow media have dubbed the Russian leader - came from Schroeder, who, after he left office in the fall of 2005, became chairman of the shareholders' committee of the project consortium Nord Stream.

As 'chief lobbyist' the former Berlin leader's main job was to ease the fears of the Baltic Sea countries about the huge project.

Parallel to this, giant Russian gas monopoly Gazprom, as majority shareholder of Nord Stream, brought in such western European energy concerns as Eon and BASF/Wintershall of Germany and Gasunie of the Netherlands.

Financing to the tune of 3.9 billion euros is coming from 26 banks, led by Commerzbank in Germany. The steel pipes to be laid down on the floor of the Baltic will come primarily from a steelworks in the German industrial town of Muelheim an der Ruhr.

Planned are two pipelines, combining for a throughput of 55 billion cubic metres of gas per year, or the energy needs of some 26 million households. That would mean that Nord Stream would be covering up to 11 per cent of the EU's total energy requirements.

That calculation is based on projections that in the year 2030, the EU's demand for gas will reach 516 billion cubic metres, from the current 200 billion cubic metres.

Besides the 1,220-kilometre pipeline stretch between Wyborg and Greifswald, three further pipelines will be necessary: one of 917 kilometres in Russia linking the gas fields with Wyborg, and two others in Germany, totalling 850 kilometres to connect with the European network.

But trouble is looming in Germany for the project. The environmental groups BUND and WWF have filed suit against construction permits for a 50-kilometre offshore section of the pipelines connecting with the station on shore.

The groups, citing concerns for the marine animal and plant life,are demanding that in the shallow waters offshore from Greifswald, the pipelines must actually be placed below, and not atop, the seabed.

Nord Stream is planning to start work after the upcoming hering breeding season, but otherwise foresees no problems. 'We are confident to be able to start up work on May 15 out in the water,' company spokesman Steffen Ebert said.