Tuesday, September 23, 2014


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Medvedev Launches Nord Stream Pipeline Construction

Russian President Dmitry Medvedev writes 'Good Luck!' on a section of the Nord Stream pipeline.
Russian President Dmitry Medvedev writes 'Good Luck!' on a section of the Nord Stream pipeline.
With the welding together of two pipes at a ceremony on Russia's Baltic coast, construction officially began on the Nord Stream pipeline project to carry Russian gas to Germany.

Speaking at the ceremony today near the town of Vyborg, Russian President Dmitry Medvedev told dignitaries and journalists: "The pipeline will ensure reliable fuel supplies to European consumers for affordable, reasonable prices. It will also protect us against problems that may be caused by the imperfections of the current legal framework, in particular with regard to transit."

The twin pipeline project, due to be fully completed by 2012, will bring some 55 billion cubic meters of Russian natural gas to Germany.

Also attending today's ceremony at Portovaya Bay, northeast of St. Petersburg, was EU Energy Commissioner Guenther Oettinger. Germany's Chancellor Angela Merkel addressed the celebrations via a video link.

The welding of the two pipes will be repeated thousands of times in the coming two years as Nord Stream's engineers assemble two giant pipelines and lay them under the Baltic Sea.

When finished, Nord Stream will be 1,222 kilometers long -- the longest sub-sea pipeline in the world. It will run straight down the middle of the Baltic Sea to reach Germany's port of Greifswald.

The first pipeline is expected to be completed by next year, and the second by 2012. Total cost is projected to be some 7.4 billion euros ($9.86 billion).

Direct Supply

Nord Stream's symbolic start comes after years of planning and controversy. Backers of the pipeline, including a succession of German governments, have long wanted it as a source of cheaper Russian energy.

Unlike current Russian pipelines to Europe, Nord Stream will not pass through any intermediate countries. That means no transit fees and major savings which can be passed on to consumers.

But opponents of the pipeline worry that it will increase Germany's dependence on Russia just at a time when Europe at large is trying to find alternatives to importing more Russian energy.

Some 50 percent of all the European Union's oil and gas imports currently are from Russia and, given current trends, that proportion is set to rise to 70 percent by 2020.

In recent years, EU states have been struck by temporary energy cutoffs from Russia amid Moscow's disputes with transit country Ukraine over gas prices.

That has given rise to fears that Russia could use energy supplies as a foreign policy weapon against the EU as it already has done against nearer neighbors like Ukraine and Georgia.

But Nord Stream's supporters have discounted those fears by extolling the pipeline project as a reason for Russia and EU states to work more closely together rather than compete.

They say that Russia is growing as dependent upon the EU through pipeline projects as vice versa. Sixty percent of Russia's export revenue currently comes from energy, and about half of that is from exports to the EU.

The Nord Stream project has also raised environmental concerns. Opponents particularly have worried that its construction could stir up toxins lying on the bottom of the highly polluted Baltic Sea.

Partly for this reason, Finland refused for years to give the project the go-ahead. It finally did so only in February, on condition the ships building the pipelines do not anchor in the waters of Finland's offshore Exclusive Economic Zone (EEZ).

The pipeline has also received environmental permits from the four other countries through whose territorial waters or EEZs the pipeline will pass: Russia, Sweden, Denmark, and Germany.

The main stockholders in the project are Russia's Gazprom (51 percent), Germany's Wintershall Holding (20 percent), Germany's E.ON Ruhrgas (20 percent), and the Netherland's Gasunie (9 percent).
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