Nord Stream closer to construction

The Russian-German Nord Stream project has cleared a major hurdle on Friday as Finland gave its approval. The Regional State Administrative Agency for Southern Finland approved the permit needed to start construction work off the Finnish coast, effectively completing the permitting process for offshore work in all five countries through which the pipeline will pass – Denmark, Finland, Germany, Russia and Sweden. Construction will start in April and the pipeline is scheduled for completion in 2011.

The plan will see the construction of a natural gas pipeline on the floor of the Baltic Sea and bypass the disruptive politics of Eastern Europe. Gazprom owns 51 per cent of Nord Stream with BASF and Wintershall having further individual stakes of 20 per cent and Nederlandse Gasunie nine per cent. Gazprom hired former Finnish prime minister Paavo T Lipponen to arrange all necessary permits for construction – keeping with its practice of hiring prominent former politicians in the West to lobby for a project majority-owned by Gazprom, according to reports in the New York Times. Nord Stream’s chairman is the former German chancellor Gerhard Schröder.

When the new pipeline begins transporting gas, further downward pressure will be exerted on European gas prices, which are already expected to remain low throughout 2011 due to abundant liquefied natural gas. With the Nord Stream project, Gazprom will be an important gas exporter to Europe for many years ahead and has access to the best natural gas market in the world, sidetracking troublesome Ukraine. The company is increasing its activity in the vast gas fields of Eastern Siberia to secure its market share in Europe.