Industry and Energy

Industry and Energy

Nord Stream clears final hurdle

12 February 2010 19:34 (UTC +04:00)

Baku â€“ APA. Nord Stream, the proposed gas pipeline between Russia and Germany, has cleared its final regulatory hurdle after Finnish environmental authorities approved the â‚¬7.4bn project, APA reports quoting ft.com (Financial Times) web-page.
The decision paves the way for construction to start in April on the controversial Baltic Sea link that will reduce Russian dependence on over-ground pipelines through eastern Europe.
Approval was secured last year from the governments of Finland, Sweden and Denmark, through whose territorial waters the pipeline will pass, but an additional permit was required from the regional environmental agency in western Finland.
The authority had delayed its decision amid concern that construction work could harm the marine environment. But it gave the go-ahead on Friday, two days after Vladimir Putin, Russian prime minister, visited Helsinki to pledge his commitment to cleaning up the heavily polluted Baltic Sea.
A legal challenge has been launched against the project by the World Wildlife Fund in Germany but Nord Stream said it expected work to start on schedule in April, with a view to the first gas flowing in 2011.
The 750-mile link is crucial to Russian efforts to bypass overland pipelines through Ukraine, which handle about 80 per cent of its gas exports to Europe. Disputes over gas trading and transit terms have marred relations between Moscow and Kiev for years and boiled over last winter when gas supplies to Europe were disrupted for two weeks during a cold snap.
Gazprom, the state-owned Russian energy group which owns 51 per cent of Nord Stream, is also planning to start work in December on another new pipeline, called South Stream, which would deliver gas to Austria and Italy via the Black Sea and Bulgaria.
Natural gas prices have sharply declined in recent months amid weakness in global demand and surging supplies of US shale gas, leading critics to question the commercial wisdom of such heavy investment in new pipeline capacity.
Sebastian Sass, Nord Stream spokesman, said the project was driven by long-term trends, such as the shift from coal to natural gas in Europe as part of efforts to reduce carbon emission, rather than short-term price fluctuations.
But Jonathan Stern, head of gas research at the Oxford Institute of Energy Studies, claimed the main motivation was â€œtransit avoidanceâ€ rather than need for extra capacity.
Germanyâ€™s BASF and Eon each have a 20 per cent stake in the project, together with Gasunie of the Netherlands, which owns 9 per cent. The pipeline, due for completion in 2012, is designed to carry 55bn cubic metres of gas a year, about a 10th of western European demand.
Nord Stream has faced fierce opposition from eastern and central European countries, which fear the project will weaken their energy security and reduce lucrative transit fees from overland pipelines.
Radoslaw Sikorski, Polandâ€™s foreign minister, once likened it to â€œthe Molotov-Ribbentrop pactâ€, the treaty through which Nazi Germany and the Soviet Union plotted to carve up Europe, while the former US ambassador to Sweden denounced it as â€œRussiaâ€™s energy weaponâ€.
One of the chief architects of Nord Stream was Gerhard SchrÃ¶der, the former German chancellor, who controversially accepted a position as chairman of the consortiumâ€™s shareholder committee shortly after leaving office.