JSC Gazprom
NORD STREAM

 

Nord Stream: Historical Background

In January 2007, Nord Stream AG launched an international bidding process for the supply of pipes to construct the 1st line of the subsea gas trunkline. Organized in line with the international standards, the bidding process is involving both international and Russian companies. The bidding results will be drawn up in the course of 2007.

In April-October 2006, intensive preparations were stepped up for a statutory permitting procedure in connection with the project. In mid-November an official project notification will be forwarded to authorized bodies in Russia, Finland, Sweden, Denmark and Germany, the countries whose exclusive economic zones and/or territorial waters the pipeline is planned to pass through as well as to Poland, Latvia, Lithuania and Estonia. This is the first stage of the permitting procedure. After a process of public consultations the project covered countries will determine the scope of required environmental and other studies and perform later on a detailed environmental impact assessment. At present, field investigations are being carried out based on Helcom data to study the marine environment of the Baltic Sea including the flora, fauna, water and sediments along the pipeline route. In autumn 2007 Nord Stream AG intends to disclose a detailed EIA report.

On October 4, 2006, the final project concept was approved on the basis of a feasibility study. Under the concept, Nord Stream’s external pipe diameter is 1,220 mm and design pressure – up to 220 bar. With these parameters the gas pipeline will be able to carry gas without midway compression. The concept also includes an offshore service platform to be constructed for pipeline maintenance purposes.

On October 4, 2006, Nord Stream AG inaugurated its branch office in Zug, Switzerland.

On October 4, 2006, Nord Stream AG approved its logo – . The logo illustrates the name Nord Stream and reflects the key values of the project: security, reliability, professionalism, dynamics, nature-friendliness, transparency, openness, international character and great scope. The logo is associated with natural gas; sea; the north; pipe in cross-section; stream. One of the most obvious visual associations for this logo is a pipe, stretching from the East to the West. It also gives a feeling of something great, encompassing. Rounded font, which is stylistically linked with the logo, adds completeness and harmony.

On October 4, 2006, North European Gas Pipeline (NEGP) Company and NEGP were renamed Nord Stream AG and Nord Stream, respectively. The new brand marks a new stage in the company’s development and aims to clearly position the project as an important infrastructure necessary to meet the growing demand for gas in Europe, as well as a safe and ecology-friendly gas pipeline solution for the Baltic region. The new name reflects the project’s mission, i. e. creating an efficient gas transmission infrastructure to secure reliable gas supply of natural gas, an eco-friendly fuel, from the Siberian fields to Northern Europe.

On August 29, 2006, Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee and Dr. Burckhard Bergmann, Chairman of the Executive Board of E.ON Ruhrgas AG entered into Agreements to extend by 15 years (from 2020 to 2035) existing Contracts for the supply of natural gas via Waidhaus and signed a Contract for the supply of extra gas via the North European Gas Pipeline. Under the extended Contracts, annual and overall gas supplies will amount to some 20 bcm and 300 bcm, respectively. The Contract for the supply of gas via NEGP contemplates annually pumping to 4 bcm, with overall shipments from 2010/2011 through 2036 to reach 100 bcm.

On March 30, 2006, the 1st official meeting of the Shareholder Committee of North European Gas Pipeline (NEGP) Company took place. The Committee will represent the interests of the company’s shareholders: Gazprom, E.ON AG and BASF AG. The Committee is comprised of four representatives of Gazprom and two representatives of BASF and E.ON each. Sitting on the Committee on behalf of Gazprom are Alexey Miller, Chairman of the Gazprom Management Committee, Alexander Medvedev, Deputy Chairman of the Gazprom Management Committee, Director General of Gazexport, Vlada Rusakova, Member of the Gazprom Management Committee and Head of the Gazprom Strategic Development Department and Gerhard Schroeder, Ex-Chancellor of the Federative Republic of Germany. BASF AG has delegated to the Shareholders Committee Eggert Voscherau, Deputy Chairman of the Board of Executive Directors, Industrial Relations Director of BASF AG and Reinier Zwitserloot, Chairman of the Management Board of Wintershall AG. E.ON AG will be represented in the Committee by Burckhard Bergmann, Member of the Management Board of E.ON AG, Chairman of the Management Board of E.ON Ruhrgas AG, Hans-Peter Floren, Director of Transmission and Storage Management, Dispatching & System Planning of E.ON Ruhrgas AG. Gerhard Schroeder was unanimously elected as Chairman of the Shareholder Committee. The meeting also resolved to appoint Matthias Warnig, Chairman of the Board of Directors of Dresdner Bank in the Russian Federation as Managing Director of NEGP Company.

On December 9, 2005, the 1st joint of the North European Gas Pipeline’s onshore section in Russia was welded in the town of Babayevo (Vologda Oblast). Attending the ceremony were Mikhail Fradkov, Chairman of the Government of the Russian Federation, Michael Glos, Minister of Economics and Technology of Germany, Alexey Miller, Chairman of the Gazprom Management Committee, Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF AG and Wulf Bernotat, Chairman of the Management Board & CEO of E.ON AG.

On November 30, 2005, the North European Gas Pipeline Company joint venture was registered in Zug (Switzerland) for the purpose of constructing NEGP’s offshore section. The shareholding in the joint venture is split between Gazprom (51 per cent) and BASF and E.ON (24.5 per cent each). North European Gas Pipeline Company will be involved in all project stages: from preparations and construction to operation of offshore gas pipeline.

On September 16, 2005, Alexey Miller, Chairman of the Gazprom Management Committee signed the Order to shift over to the investment stage in the North European Gas Pipeline project implementation. Under the updated business plan, annual gas exports via NEGP are projected at up to 55 bcm.

On September 8, 2005, Gazprom, BASF AG and E.ON AG entered in Berlin into an in-principle Agreement to construct the North European Gas Pipeline (NEGP) through the Baltic Sea. Under the Agreement, the partners intend to set up North European Gas Pipeline Company as a German-Russian joint venture between Gazprom (51 per cent), BASF (24.5 per cent) and E.ON (24.5 per cent).

On April 11, 2005, Hannover hosted a working meeting of Alexey Miller, Chairman of the Gazprom Management Committee, Dr. Wulf Bernotat, Chairman of the Management Board & CEO of E.ON AG and Dr. Burckhard Bergmann, Chairman of the Board of E.ON Ruhrgas AG & Member of the Management Board of E.ON AG. In accordance with the Agreement, E.ON will acquire up to 25 per cent of shares in the Yuzhno-Russkoye gas field development project. Gazprom, on its part, will purchase an equivalent ownership interest in E.ON’s gas marketing and electricity assets in Europe. Moreover, both companies will continue discussing possibilities for E.ON to get involved in the North European Gas Pipeline construction and joint projects in the Russian power generation sector.

On April 11, 2005, Alexey Miller, Chairman of the Gazprom Management Committee and Dr. Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF AG inked in Hannover a Memorandum of Understanding in the presence of Russian President Vladimir Putin and German Federal Chancellor Gerhard Schroeder. In pursuance of the MoU, Gazprom will increase its stake from 35 to 50 per cent minus 1 share in the WINGAS joint venture with Wintershall AG (a 100 per cent BASF AG subsidiary). As set forth in the MoU, the companies will deepen cooperation in geological exploration and gas production in Russia. In particular, Gazprom and Wintershall agreed to jointly develop the Yuzhno-Russkoye gas field, with the latter company’s stake to be 50 per cent less 1 share. The MoU also envisages the possibility for other West European companies capable of making a substantial contribution to get involved into the project. The MoU includes the Agreement on WINGAS’ participation in the North European Gas Pipeline construction project. WINGAS is projected to link NEGP with the German gas pipeline network.

On March 21, 2005, the Gazprom Headquarters hosted a regular working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Dr. Klaus Mangold, Chairman of the Eastern Committee of the German Economy. The parties went on exchanging opinions on the major directions of the cooperation between Russia and Germany in the energy sector. As it was pointed out, the main principle of cooperation between Russian and German energy companies still remained the mutually beneficial partnership covering the entire cycle: from the well head to the end user. Special emphasis fell on the cooperation between Russia and Germany within the North European Gas Pipeline project.

On March 16, 2006, Alexey Miller, Chairman of the Gazprom Management Committee and Klaus Kleinfeld, President and CEO of Siemens AG signed in Munich an Agreement on Strategic Partnership between Gazprom and Siemens AG. The Agreement regulates matters relative to the bilateral cooperation between the parties when executing Gazprom's new projects embracing the North European Gas Pipeline construction, Yuzhno-Russkoye gas field development, gas transmission system development outside Russia, and electricity generation projects.

On February 24, 2005, the Gazprom Headquarters has hosted a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Eivind Reiten, President and CEO of Hydro. Eivind Reiten confirmed Hydro’s readiness to take part in the North European Gas Pipeline project, expressing intentions to build up more intensive cooperation with the European gas market players.

On February 12, 2005, a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Dr. Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF AG was conducted at the Gazprom Headquarters. The meeting addressed issues with regard to deeper bilateral cooperation, discussing interaction between the companies within new Gazprom-led projects covering the North European Gas Pipeline construction and field development.

On February 8, 2005, the Gazprom Headquarters hosted a working meeting between, Chairman of the Gazprom Management Committee and Klaus Kleinfeld, President and CEO of Siemens AG. The parties addressed the implementation of the Memorandum of Understanding and deliberated on issues of bilateral interaction when jointly implementing Gazprom’s new projects, including when constructing the North European Gas Pipeline, developing the Yuzhno-Russkoye gas field, expanding gas transmission networks outside Russia as well as promoting power generation projects. The decision was taken to adjust the Memorandum of Understanding taking account of the new joint businesses.

On December 22, 2004, during the visit of a Gazprom delegation to France Alexey Miller met with Jean-Francois Cirelli, President of Gaz de France. The parties pondered on the cooperation prospects for Gazprom and Gaz de France, including on the potential forms of cooperation within the North European Gas Pipeline construction projects. The decision was taken to deepen the long-term collaboration within the said project to be aimed at bolstering gas supply security and meeting boosting gas demand in Europe.

On December 7, 2004, the Gazprom Headquarters hosted a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Lord Browne, President of BP Group. The meeting addressed potential bilateral cooperation on the global and Russian energy markets as well as the possibility for BP to become a partner in the North European Gas Pipeline project.

In November 2004, the Gazprom Management Committee reviewed the paramount measures with regard to bringing onstream the Yuzhno-Russkoye oil and gas field. The Management Committee tasked Severneftegazprom with initiating Yuzhno-Russkoye’s development in 2004 and bringing the field stream in 2007.

On October 22, 2004, Alexey Miller, Chairman of the Gazprom Management Committee and Lord Browne, President of BP Group met in London as part of the regularly meetings between the CEOs of the two companies. The parties addressed matters of bilateral cooperation on the global energy market as well as studied the possibility for BP to participate in the North European Gas Pipeline project, both as a member of a pipeline consortium and with the view of purchasing gas to be destined for the British market.

On October 20, 2004, Alexey Miller, Chairman of the Gazprom Management Committee met with Dr. Jurgen Hambrecht, Chairman of the Board of Executive Directors of BASF AG during the visit of a Gazprom delegation to Germany. The parties discussed the prospects for bilateral cooperation, including via WINGAS GmbH, a joint venture between Gazprom and Wintershall AG (a wholly owned BASF AG subsidiary). Representatives of WINGAS GmbH entered the Working Group responsible for providing a feasibility study on the North European Gas Pipeline construction project.

In July 2004, E.ON Ruhrgas and Gazprom signed a Memorandum of Understanding fixing the accords to further deepen the successful cooperation within the strategic projects. The MoU calls for the two companies to be active in executing the Joint construction of the North European Gas Pipeline project.

On June 11, 2004, at the Gazprom Headquarters, Alexey Miller, the Gazprom Management Committee Chairman held a meeting dedicated to the implementation of the Investment Project on the Yuzhno-Russkoye gas field development. The meeting addressed issues related to the project financing-based development of the Yuzhno-Russkoye field and resolved to submit these matters for Gazprom’s Management Committee’s consideration in June 2004. In addition, the parties debated the progress in engineering the North European Gas Pipeline. For the time being, over 70 per cent of prospecting has been conducted at the Gryazovets-Vyborg section and 90 per cent of engineering and geological data have been collected on the gas pipeline route and sites of compressor stations. The meeting pointed out that all the works were being performed according to schedule

On May 27, 2004, a working meeting between Alexey Miller, the Gazprom Management Committee Chairman and George Verberg, CEO of N.V. Nederlandse Gasunie and President of the International Gas Union (IGU), was held at the Gazprom Headquarters. The parties deliberated on the progress in and prospects of cooperation between Gazprom and Gasunie, Alexey Miller and George Verberg addressed issues of Gasunie’s participation in engineering the North European Gas Pipeline.

On March 17, 2004, at the Gazprom Headquarters, Alexey Miller, the Gazprom Management Committee Chairman, held a meeting on the Yuzhno-Russkoye field development. The meeting decided to identify the Yuzhno-Russkoye field as the main feedstock base for delivering gas via the North-European gas pipeline. For this purpose, an order was given to synchronize preparation of business plans and provision of feasibility study for constructing the North European Gas Pipeline and developing the Yuzhno-Russkoye gas field.

In February 2004, at the Gazprom Headquarters, Alexey Miller, the Gazprom Management Committee Chairman, held a meeting dedicated to implementation of the North European Gas Pipeline (NEGP) construction project. As it was pointed out at the end of the meeting, the Draft business plan on the NEGP construction was thoroughly elaborated and could be taken as a basis in providing a detailed feasibility study. The participants determined Gazprom’s priorities in selecting foreign partners to be involved in the Project.

On February 10, 2004, a working meeting between Alexey Miller, the Gazprom Management Committee Chairman, and Herbert Walter, Chairman of Dresdner Bank AG’s Board of Managing Directors, was held at the Gazprom Headquarters. A. Miller and H. Walter also raised the issue of further cooperation. In particular, the parties came to an accord that Dresdner Bank would serve as one of the financial advisors in drafting the North European Gas Pipeline construction.

On January 16, 2004, the Russian Federation Government issued Order N64-r, in which the Government approved the Russian Federation Energy Ministry and Gazprom’s proposal (agreed with respective Russian Federal Executive bodies) on engineering the North European Gas Pipeline (NEGP). Under the Order, the Russian Federation Energy Ministry has to prepare, jointly with Gazprom, documentation required for the NEGP construction. The Russian Federation Government commissioned the Russian Federation State Committee for Civil Construction (Gosstroy) and the Russian Federation Ministry of Natural Resources to provide, together with the interested Russian Federal Executive Bodies, public expertise of this documentation.

On June 30, 2003, Russian President Vladimir Putin and UK Prime Minister Anthony Blair inked the bilateral Russian-British Memorandum of Cooperation as regards the execution of the North European Gas Pipeline project.

On December 3, 2002, the Gazprom Headquarters hosted the presentation of a new Gazprom’s strategic project, i.e. construction of the North European Gas Pipeline.

On November 28 and 29, 2002, London hosted the meetings of Alexey Miller, Chairman of the Gazprom Management Committee, Brian Wilson, UK Energy Minister and Member of Parliament and top executives of BP, Royal Dutch/Shell, Centrica and Goldman Sachs. The parties discussed a wide range of matters of mutual interest, including the implementation prospects for the NEGP project.

On November 26, 2002, the Hague hosted the meetings involving Alexey Miller, Chairman of the Gazprom Management Committee, Jan Peter Balkenende, Prime Minister of the Netherlands and George Verberg, CEO of N.V. Nederlandse Gasunie. The parties touched upon the outlooks of interaction in the gas sector, placing a focus on the NEGP project implementation.

On November 25, 2002, Helsinki hosted the meetings attended by Alexey Miller, Chairman of the Gazprom Management Committee, Paavo Lippone, Prime Minister of Finland and Matti Vuoria, Chairman of the Fortum Management Committee. The parties touched upon the outlooks of interaction between Russia and Finland in the gas sector, including the NEGP project implementation.

On November 21, 2002, Alexey Miller, Chairman of the Gazprom Management Committee met with Valery Serdyukov, Governor of the Leningrad Oblast. The parties decided to set up a joint Working Group aimed at settling issues relevant to provision of engineering surveys and the NEGP project harmonization in the Leningrad Oblast.

On November 18, 2002, the Gazprom Management Committee adopted a resolution to implement the NEGP project. Gazprom approved the action plan and milestones schedule for the NEGP project.

On November 11, 2002, Brussels hosted a working meeting between Alexey Miller, Chairman of the Gazprom Management Committee and Franзois Lamurier, Director General for Energy and Transport of the European Commission. During the meeting, the European Commission classified NEGP as a high energy and transport priority project and presented it to the European Bank for Reconstruction and Development (EBRD).

In December 2000, Russian played a leading role in developing new natural gas transmission routes to Western Europe taking into consideration the interest of the European Union member states to develop a unified European energy market and joint energy supply system. The European Commission gave a TEN (Trans European Networks) status to the NEGP project. The TEN status helps to settle issues relevant to the project implementation within the territory of European Union as well as attracting EU financial resources.

During 1997 – 1999, offshore prospecting in the Baltic Sea was completed at full within the attraction of leading world engineering companies and Russian institutes. The feasibility study for offshore section construction confirmed technical capability and economical effectiveness of NEGP construction.