Sunday, February 14, 2010

Pipeline Puzzles: Finland Approves North Stream Construction

The paperwork appears in order, let the construction begin.  That's the message coming out of the Russian-led consortium to build the Nord Stream pipeline to ship Russian gas under the Baltic Sea to Europe.  On February 12, 2010 -- Finland approved construction of the pipeline under their territorial waters, 374-kilometers worth of tubing.  Now, the Nord Stream consortium says construction on the 1,200-kilometer pipeline will begin in April. 

That's the final hurdle for Nordstream after naysayers doubted whether the Russians would get their financial and political ducks in line.

But they did.  Before Finland, the project had gotten the okay from Denmark, Germany, Russia and Sweden.   

Not surprisingly, the Nord Stream folks were euphoric on Friday. 

"This is the culmination of four years of intensive studies, consultations and dialogue with the authorities, experts, stakeholders and the public in Finland and other countries," Nord Stream managing director Matthias Warnig said in a statement.

Nord Stream said the 7.4-billion-euro should be ready to ship gas by 2011.

When finished, the 1,200 kilometer pipeline will run from Russia to Germany along the Baltic Sea sea bed, bypassing Finland, Estonia, Latvia, Lithuania, Poland and Sweden.

"We are approaching the final stages of implementing this project," Russian Prime Minister Vladimir Putin said Thursday, quoted by the Interfax news agency.

For those thinking the pipeline will only tighten Russia's energy nose further around Europe's flabby neck, think again. 

Yes, Gazprom has a 51 percent majority stake in the project, not surprising since it will be Russian natural gas flowing through it. 

But Germany's BASF-Wintershall and E.ON Ruhrgas also hold 20 percent each and Gasunie of the Netherlands has a nine percent stake. 

The basic narrative is that Russia opted for the pipeline to cut the pesky Ukrainians under Viktor Yushchenko out of the energy equation to punish Kyiv for its pro-West stance. 

Right now, about 80 percent of Russian gas exports to the EU pass through Ukraine.

But instead of consolidating the energy field, Nord Stream could signal a more diversified one. 

Talking to Russia Today, David Grey, Leader of Energy and Mining at PricewaterhouseCoopers says that means a change to a more competitive environment.

“The old structure, was built under the Soviet Union where it was all one state. Now we have a more competitive environment where there are many different states involved, and therefore their position as the sole transit route for Russian gas through into Europe – understandably that is probably not a tenable long term position, and Europe is going to look for additional sources of supply and additional routes, and so Ukraine understands that, and appreciates that in order to be competitive it needs to be competitive using its own routes, but also perhaps diversifying into looking at participating in the wider energy market."

However, the old narrative of Russia's 'energy weapon' is an old habit to break, as evidence here in this Al-Jazeera interview. 

Stephen Cole asked Sebastien Saas, Nord Stream's EU representive, what impact the project could have on the Baltic Sea.

Those fears pale in comparison to some of the earlier malarkey stoked in the West.  At one time, Sweden feared the Russians would use Nord Stream as a Trojan Horse to bring in spies.  I kid you not, check out the article from Spiegel here

It would seem projects like Nord Stream can tear down old walls of fear and suspicion.
Reblog this post [with Zemanta]

No comments: