May 2009 Vol. 236 No. 5

Projects

Nord Stream Submits Environmental Study To Finland

The management team behind the Nord Stream pipeline project have submitted its environmental impact report to Finnish officials. The first pipeline will be ready in 2011 if Nord Stream gets the needed permits from all national authorities to go ahead with construction.

Gazprom is the 51% majority shareholder in the consortium. German firms BASF-Wintershall and E.ON Ruhrgas each own 20% and the Dutch Gasunie 9%. Nord Stream says most of the impact on Finnish economic waters will occur during the construction phase.

The second major project for gas transmission from Russia to the EU is the joint South Stream project of Gazprom and the Italian ENI. The pipeline is planned to run from Russia across the bottom of the Black Sea to Bulgaria, and then on to Italy or Austria. South Stream’s annual capacity should be 30 billion m3, with completion set for 2015.

The third project under planning, the EU-supported Nabucco pipeline run by a consortium led by the Austrian OMV, will carry gas from Caspian Sea fields to the EU. Construction is planned to begin in 2011 and would reach full capacity of 31 billion m3 in 2020. The project may, however, be delayed as EU ministers have refused to grant financing. German Chancellor Angela Merkel has specifically opposed proposals to use EU funds to kick-start Nabucco.

Private lending offers for Nabucco are lacking during the financial crisis and not least due to the absence of seed money from the EU to boost private-sector confidence in the project. Gas for the pipeline’s first phase is actually ensured thanks to Azerbaijan; and there are also short-to-medium-term offers from Iraq and Egypt.

The European Commission believes that Nord Stream and South Stream are business projects whereas Nabucco is a strategic priority of the EU. Since Berlin could not elevate Nord Stream and South Stream to the same level as Nabucco in EU policy, Merkel seems determined to downgrade Nabucco to the same level as Gazprom’s two projects, which do not qualify for EU support.