November 17, 2009

Construction set to begin on Russia-to-Germany natural gas pipeline

STOCKHOLM

Sweden and Finland have approved a Baltic Sea pipeline project that would ship Russian natural gas to Germany, clearing two key obstacles for construction to begin next year.

Sweden said the $15-billion Nord Stream project met its demands to protect the marine environment, while Nordic neighbour Finland approved the construction with the caveat that builders must supply additional information about the environmental impact to a regional authority.

The twin pipelines, which were approved by Denmark last month, also need the green light from authorities in Russia and Germany. That is expected to be a formality, since the project is backed by both governments.

Once completed, the two 1,200-kilometre pipelines would carry a total of 55 billion cubic meters of gas a year from the Russian port of Vyborg to the German port of Greifswald. Construction is expected to start next year, with the first pipeline planned to be ready for 2011.

Moscow wants to use Nord Stream, and a mirror project in southeastern Europe, to strengthen its grip on European gas markets and head off a U.S.-based pipeline project, Nabucco, that would bypass Russia.

Russia also wants to invest in pipelines that do not cross its neighbour, Ukraine. Moscow depends heavily on Ukrainian pipelines to get its gas to Europe and the two rivals have been at odds for years over energy issues.

Associated Press

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