WTI Crude

Loading...

Brent Crude

Loading...

Natural Gas

Loading...

Gasoline

Loading...

Heating Oil

Loading...

Rotate device for more commodity prices

Alt Text

Asian Crude Markets On Edge As OPEC Meets

While OPEC infighting continues in…

RFE/RL staff

RFE/RL staff

RFE/RL journalists report the news in 21 countries where a free press is banned by the government or not fully established. We provide what many…

More Info

Merkel, Medvedev Launch Nord Stream Pipeline Beneath Baltic Sea

The leaders of Germany and Russia have inaugurated the Nord Stream pipeline, linking Western Europe directly with Siberia's natural gas reserves.

German Chancellor Angela Merkel and Russian President Dmitry Medvedev turned on a tap that opened the flow of gas at the western end of the new link during a ceremony in the northeastern German town of Lubmin.

"Today marks a remarkable, long-awaited event," Medvedev said. "We are launching the first pipeline of Nord Stream, which opens a new page in our country's cooperation with the European Union, and all previous speakers took note of that. For the first time, Russian gas will reach countries of the European Union directly."

The prime ministers of France and the Netherlands -- Francois Fillon and Mark Rutte -- and EU Energy commissioner Guenther Oettinger also attended today's ceremony, underlining the political importance of a new energy link meant to strengthen the security of natural-gas supplies.

Once seen as a means to bring extra Russian natural gas to Europe, the $10 billion pipeline's main purpose now is to lessen Moscow's reliance on transit pipelines that pass through Ukraine and Belarus.

At today's ceremony, it was billed as "the new gas supply route for Europe."

"It is an important gas pipeline that will reduce Russia's dependence on transit countries like Ukraine," says Valery Nesterov, an analyst with Troika Dialog, a major Russian private investment bank. "Not only will it ensure more stable supplies of Russian natural gas to Europe, it will also open up opportunities for further increasing natural gas exports, primarily to Germany."

The 1,224-kilometer Nord Stream pipeline is now the longest undersea pipeline in the world, surpassing by about 60 kilometers the Langeled pipeline, which carries natural gas to the United Kingdom from northern Norway.

Bypassing Transit Disputes

The Nord Stream route links into Russia's pipeline network at the Russian port of Vyborg.

It has been laid along the bed of the Baltic Sea to reach Western Europe at a terminal in Lubmin near the German city of Greifswald, just a few kilometers from the border with Poland.

The project is a joint venture between Gazprom, German firms BASF and EON, the Dutch company Gasunie, and GDF Suez of France.

Nord Stream Pipeline
The Nord Stream pipeline capacity

The launch of the conduit on November 8 involved the first of two planned parallel pipelines beneath the Baltic Sea. The second pipeline of the Nord Stream project is still being laid and is scheduled to become operational in late 2012.

Nord Stream says once both pipelines are fully operational, they will carry 55 billion cubic meters of natural gas a year into the European grid.

About one-quarter of the natural gas consumed in the European Union is now supplied by Russia, and about 80 percent of Russian natural gas supplies to the EU currently pass through Ukraine.

But there have been numerous disputes between Ukraine's oil and gas monopoly Naftogaz Ukrainy and Russia's Gazprom over natural gas supplies, prices, and debts. Those disputes have led to disruptions of supplies to the EU in the past.

The Nord Stream route also bypasses Poland and the Baltic states -- leading to criticism from those countries since the project was agreed in 2005, even though the European Union has supported the pipeline.

Ongoing Source Of Tension

Nonetheless, Russian political analyst Dmitry Oreshkin thinks that the project should help ease the fears of Russia's smaller Baltic neighbors over Moscow's military power.

"One positive thing is that by building this pipeline superpower, Russia, in one way or another, is adopting the European system of values where it is customary to fulfill one's contractual obligations," he says.

"[This means] complying with agreements that have been reached, whereby it is unacceptable to be rude to one's neighbors or try to impose a 'happy future' on them with the butt of a rifle. If there is something like the Nord Stream pipeline, there will definitely be no attempts to threaten Estonia with tanks."

Even so, the politics of Russia's natural-gas deliveries are an ongoing source of tension between Warsaw and Moscow.

Poland depends heavily on Russian gas imports and is itself a transit country for Russian deliveries to the EU.

Poland's gas monopoly, PGNiG, is locked into long-term gas deals which have linked the price it pays for Russian gas imports to high oil prices. But it is forced to sell the gas on to EU customers at lower retail prices.

On November 7, the Polish gas monopoly filed an arbitration procedure against Gazprom in a bid to cut the import prices it pays under its long-term supply deal.

Minsk has also had disputes with Gazprom over gas prices and debts, leading Gazprom to cut back on deliveries to Belarus in 2007.

By. Ron Synovitz

Copyright (c) 2010. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News