Massive New Russian Gas Pipeline to Europe Now in Operation

Yesterday, a ceremony was held in Lubmin, Germany to inaugurate the Nord Stream gas pipeline, connecting natural gas in Russia to Western Europe. The new pipeline is unique in that it goes directly to Germany from Russia without passing through any other country. The pipeline runs along the bottom of the Baltic Sea, past the coasts of Finland, Sweden, and Denmark. The inauguration event is being highly touted by the respective governments. In attendance are Russian President Dmitry Medvedev, German Chancellor Angela Merkel, Dutch Prime Minister Mark Rutte, French Prime Minister Francois Fillon, and EU Energy Commissioner Gunther Oettinger.

The Nord Stream pipeline is 1,220 kilometers (760 miles), linking the city of Vyborg, Russia which is 130 km northwest of St. Petersburg, to Greifswald, Germany, directly north of Berlin. It cost about 7.4 billion Euros ($10.2 billion) and is capable of delivering 55 billion cubic meters of gas per year. The project was championed by former German Chancellor Gerhard Schroder, who is now the chairman of the Nord Stream shareholders’ committee.

Nord Stream will connect with the German grid through the OPAL pipeline which covers Eastern Germany, and the still-under-construction NEL pipeline which services Western Germany. The Nord Stream actually has two parallel lines which can each deliver 27.5 billion cubic meters annually. The second line is set to be completed in 2012. The possibility still exists for constructing a third parallel line, but only if it is commercially viable.

At the present, the new pipeline has received orders to deliver about 22 billion cubic meters per year, less than half its capacity. While this may concern some investors who would like to see a quicker return on their investment, it is not uncommon for such huge projects. According to Vladimir Feygin, president of the Russian Institute for Energy and Finance, pipelines like the Nord Stream are built for their long term contracts. The pipeline will be able to increase output if and when it is necessary.

According to Matthias Warnig, managing director of the German-Russian gas pipeline consortium, it would take between 14 and 15 years to recoup the expense if the pipeline operates at full capacity. At less than half capacity, it may take much longer.

Environmentalists are on the fence in approving/disapproving the project. Gas is a fossil fuel that emits greenhouse gases when burned, but in far less quantity than other fossil fuels like coal. For this reasons, groups like Greenpeace are in favor of it. The greater concern is the ecological impact the pipeline may have in the Baltic Sea. Environmental planning and monitoring were done by Nord Stream to the tune of over 100 million Euro ($138 million). Nonetheless, the pipeline will have an impact on the fragile benthic ecosystem of the Baltic.

Article by David A. Gabel, appearing courtesy Environmental News Network.

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