MOSCOW, Nov. 8 (UPI) -- The last partner for the Nord Stream project to build a gas pipeline along the bed of the Baltic Sea has been chosen.
On Nov. 6 Russian President Vladimir Putin and Dutch Prime Minister Jan Peter Balkenende attended the signing of the cooperation agreement between Gazprom and Nederlandse Gasunie.
Under it, the Russian monopoly gives the Dutch natural gas transportation company a 9 percent share in the Nord Stream pipeline project in return for a 9 percent stake in Gasunie-controlled pipeline operator BBL, which is building a pipeline from Balgzand in the Netherlands to Bacton in Britain.
The 746-mile Nord Stream, estimated at $7.34 billion, is the largest gas pipeline project in Europe. The first stretch with a capacity of 27.5 billion cubic meters of gas is to be commissioned in 2010. The second will increase the capacity to 55 bcm.
The capacity of the Balgzand-Bacton Line is 20 bcm.
According to the agreement, Gasunie will receive stakes from Gazprom's German partners, Wintershall Holding and E.ON Ruhrgas, 4.5 percent from each. Gazprom has an option to buy a 9 percent share in BBL, while Gasunie will retain a 51 percent stake in the company, and E.ON Ruhrgas and Fluxys will each hold 20 percent.
The agreement will give Gazprom additional access to the British natural gas market. So far, the British establishment has been hindering the advance of Russian gas suppliers into its retail market.
The agreement also stipulates the use of Gasunie's gas transportation network in the Netherlands. N.V. Nederlandse Gasunie is an entirely state-owned infrastructure and transport company, with one of Europe's largest gas distribution networks. It is more than 7,458 miles long and has an annual capacity of 100 bcm, which is a large share of European consumption.
Gasunie intends to offer Gazprom the use of its well-equipped transport network headquartered in the Netherlands and to jointly look for ways to swap minority stakes in gas infrastructure projects.
It is a major package deal involving Gasunie and several other Dutch companies. In return for access to Nord Stream, they are ready to offer Gazprom participation in European infrastructure projects, which the European Union has kept closed to the Russian gas monopoly. At the same time, the Netherlands will strengthen its position as a global gas business hub in northwestern Europe.
According to experts, the participation of Gasunie in Nord Stream will strengthen Gazprom's chances of European expansion. Nord Stream will increase gas exports and also bypass such difficult transit countries as Ukraine and Belarus.
Russia will also benefit from working in the Dutch market, where Gazprom will eventually seek access to the end users. It has been forecast that Russia will supply about 7 bcm of gas annually to the Netherlands, or 5 percent to 6 percent of the total supplies to Western Europe.
Besides, Nord Stream will also gain from Gasunie's accession because the participation of a respected Western European company is traditionally viewed as a guarantee of timely and uninterrupted supply.
This is a vital condition in light of continued attacks on Nord Stream by the bypassed transit countries. The governments of Estonia, Lithuania, Latvia and Poland have joined forces and are trying to hinder the construction of the pipeline across the Baltic Sea for "environmental concerns."
The latest obstacle appeared in early November, when the Swedish government demanded that the pipeline's route be moved eastward, closer to the Baltic Sea shore, in order to avoid environmental damage.
Andreas Carlgren, Sweden's environment minister, said last week in Oslo that Nord Stream had chosen a route that would pass through a number of areas containing World War II mines and chemical weapons. The route would also run along designated special protection areas.
Last spring Finland mentioned an alternative route for the Russian-German subsea pipeline in the Gulf of Finland, which would move it closer to the Estonian coast.
This is why the constructive spirit and positive results of the recent meeting between the political and business leaders of Russia and the Netherlands are so important. The delegation of Shell, Gasunie, Essent, Philips, Campina, Unilever, KLM, banks ING, Rabobank, Van Oord and other companies was led by the Dutch state secretary for economic affairs and its economics minister.
The Netherlands is Russia's second-largest trade partner in Europe, and so their cooperation will have a major effect on the situation. Essent, a large Dutch energy company, plans to offer Gazprom the opportunity to contribute their funds to build a liquefied natural gas terminal in the seaport of Eemshaven and several thermal power plants in the Benelux countries and Germany.
Gazprom said it would carefully analyze the idea.
Nord Stream is becoming increasingly popular: On Nov. 2 the Czech Republic announced its plans to build an offshoot from the pipeline.
The EU is gradually coming to see that Nord Stream will benefit not only Russia, but also, and to a larger degree, Europe.
Alternative energy supply routes are being built slower than planned. If the European gas market keeps growing at the current pace, the EU will need about 230 bcm of gas in 2015 in addition to the current supplies, according to the International Energy Agency.
The two stretches of Nord Stream will supply 55 bcm annually. The other projects that could provide comparable amounts of gas will not be ready anytime soon.
This is why the European Commission has officially announced that it does not share the concerns of Poland and the Baltic countries regarding the subsea part of Nord Stream. Moreover, the commission said it would support the project.
Its energy commissioner, Andris Piebalgs, made public Europe's stance during his Moscow visit on Oct. 23. He also criticized the attempts by Poland and the Baltic countries to block the construction of the undersea part of the pipeline.
--
(Igor Tomberg, Ph.D., is a senior research fellow with the Center for Energy Studies, the Institute of World Economy and International Relations at the Russian Academy of Sciences. This article is reprinted by permission of RIA Novosti. The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.)
--
(United Press International's "Outside View" commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)
