Nord Stream: the current status and possible consequences of the project's implementation
The decisions taken in November concerning the Nord Stream project
(the construction of a direct trans-Baltic pipeline from Russia to
Germany), have sent contradictory signals concerning the prospects
for the implementation of this priority project for Russia. On the
one hand, the fact that the Dutch Gasunie has joined the project has
given it a strong political impulse. On the other, however, Sweden
and Finland have maintained their reservations concerning the planned
routing of the pipeline, and consequently a vitally important issue
for Nord Stream remains unsolved.
Signals that the project is progressing
The image of the Nord Stream project improved with the agreement signed on 6 November with Gasunie. The Dutch gas company is to become the fourth member of the Nord Stream consortium by the end of this year (the consortium's new composition will be as follows: 51% Gazprom, 20% E.ON, 20% BASF and 9% Gasunie). The Netherlands has thus joined the group of countries that had previously backed Nord Stream, including Germany, France and Denmark. Companies that have also expressed interest in gas supplies from the new route include Britain's Centrika, Belgium's Distrigas and Spain's Repsol. Another fact which might indicate that the project is advancing is that contracts for the supplies of pipes for the gas pipeline's submarine section have been concluded with Russia's United Metallurgical Company (on 6 November) and with Germany's Europipe (on 8 November). The contract with Saipem, a subsidiary of Italy's ENI which is to build the submarine section, is expected to be signed in early 2008. Contracts have been signed for a greater part of the volume of gas (20.5 billion m3) to be supplied by the first branch of the pipeline, whose total projected throughput is 27.5 billion m3 (see Appendix). Other signals that also seem to demonstrate that the project's implementation is progressing include reports on the fast progress of the construction of the gas pipeline's land section in Russia, and on preparations to put the Yuzhno-Russkoye field (with a planned annual output of 25 billion m3) into operation; gas for the first branch of Nord Stream is to be sourced from there in the initial period.
Factors impeding the project's implementation
However, there are many signals suggesting that the implementation
of the project in the currently envisaged shape and according to the
current schedule (by 2010) is not certain. The greatest challenge
seems to come from the fact that Sweden has refused to accept, and
Finland has reservations about, the routing of the pipeline through
their exclusive economic zones. Both states reasserted their positions
at the meeting of the Nordic Council in Oslo on 7 November. Helsinki
and Stockholm called on the consortium to prepare and present environmental
impact assessments for alternative variants for routing the pipeline,
which would pose less of a threat for the natural environment of the
Baltic basin. Bypassing the Finnish and Swedish economic zones does
not seem feasible either, because the other Baltic states, especially
Poland, Lithuania and Estonia, do not approve the project.
While striving to implement the project as soon as is practicable, the Nord Stream consortium has still not succeeded in solving several issues that are quite important for the achievement of its objective. For example, the question of the resource base for Nord Stream has not been fully resolved (see Appendix). Initially, the Yuzhno-Russkoye field was to provide such a base, even though its reserves are insufficient to fill the gas pipeline. The Shtokman field on the Barents Sea has for some time been mentioned as a source of gas for the new route, but it will not be put into operation before 2015. By the time production is launched in the Shtokman field, Nord Stream would probably be fed with gas from the currently operated fields in Western Siberia, possibly at the expense of other export routes. Another uncertain issue concerns Gazprom's co-operation with E.ON, one of the German partners of the trans-Baltic project (the agreement with the other partner, BASF, was finalised in October). It is still unclear whether E.ON will be granted access to the Russian fields and on what terms, whereas such access has been one of the principal conditions of its participation in the costly Nord Stream project. The terms of the project's financing (such as the amount of the loan and who will grant it) have not yet been defined. Some progress in this respect was achieved on 6 November when the consortium selected the Societe General?, ABN Amro and Dresdner Kleinwort banks as finance consultants for the project. In their opinion, the loan should be awarded in the second quarter of 2008.
Nord Stream's current status and prospects
There are more and more signals suggesting that preparatory work on the project is accelerating, although the construction of the gas pipeline's maritime section has not yet started. The problems faced by Nord Stream, in particular those concerning the definition and approval of the pipeline's final route, have already forced the consortium to postpone the start date of construction works by six months, from February to July 2009.
Due to the tight schedule of construction work, it seems unrealistic that the first branch of the pipeline would be completed as planned, namely by 2010. This is due to both formal obstacles and the fact that construction of a pipeline on the bottom of the Baltic Sea needs to comply with certain environmental requirements (such as protective periods for Baltic fauna).
The Nord Stream consortium has committed itself to presenting detailed plans and analyses of possible alternative routes of the submarine pipeline. Despite the serious difficulties in getting the states concerned to approve the successive variants proposed by the consortium, giving up the plans to build the pipeline is not an option for Gazprom at the moment. The trans-Baltic gas pipeline is of too great strategic importance for Russia; furthermore, getting it implemented is a matter of prestige for the Kremlin. Replacing the maritime route with a land gas pipeline (such as Yamal 2 or Amber) does not currently seem to be a realistic option. The Russian PM Viktor Zubkov's statement in Minsk, that the project to build a second branch of the Yamal-Europe pipeline might be revisited, should now be treated as nothing more than an element of Russia's tactics in its negotiations with Belarus, Poland and the EU.
The consequences of a possible launch of a new gas transport route from Russia
Launching the Nord Stream gas pipeline would have important consequences
for most European countries.
Ewa Paszyc, Agata Łoskot-Strachota, co-operation: Łukasz Antas
Selected information on the Nord Stream project
Capacity: 55 billion m3 a year in the variant with two branches.
Each branch would have a capacity of 27.5 billion m3.